The precious metals market did have some help along the way. This came primarily in the form of fiscal policy in the United States. The debt ceiling, on schedule, needed to be raised again this month and, though there was less noise than we saw during the debt standoff in August, the ceiling was again raised by $1.2 trillion, furthering an inflationary monetary policy that has been bolstering the price of precious metals for a decade.

Concurrently, the action of the Federal Reserve’s Federal Open Markets Committee’s public announcement that official policy will keep interest rates low through 2014 brought additional support to gold and silver. Previously, the Fed has said it would keep interest rates low through the middle of 2013 as a support for the extremely fragile and ailing economy. Any increase in the interest rates would seriously risk any recovery and would most likely cause instant damage.

A forced low-interest rate policy, however, has been very good for precious metals in the decade since it was begun during the Greenspan administration. Major banks are currently revising their forecasts for gold higher based on the FOMC’s open statement. Previously, Goldman Sachs, JP Morgan, and numerous others were forecasting gains in gold through the end of 2012 with some projections of the price per ounce breaching $2,200 per ounce.

Now, with fiscal policy openly declared, that number could be a little low and the bull market in gold and silver has a green light from the Fed to extend through 2014. This goes some way in accounting for the 11 percent gain in gold and the 20 percent gain in silver we have seen in the first month of 2012, and indicates how much farther gold and silver will be going through the year.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

In general, 2012 has been very good for precious metals so far. After a December correction brought the price of gold down to the $1,500 an ounce range the price of silver down to $27 an ounce, the US Mint broke records for sales of gold and silver Eagles on its first day of sales. The Mint sold 37,500 ounces of gold Eagles, 2,000 ounces of gold buffaloes, and 3,197,000 silver Eagles. By the 25th of this month, the Mint had sold 5,547,000 silver Eagles. The all-time monthly record was set in January of 2011 as the Mint sold 6,422,000 silver Eagles.

As Eric Sprott, the director of the $10 billion Canadian hedge fund Sprott Asset management, points out, they’re selling gold and silver on an equal dollar for dollar basis, meaning the Mint is selling fifty times as much physical quantity of silver as it has been selling for gold. Sprott himself recently placed another large order on the open market for silver bullion after shocking some with a $1.5 billion order his firm placed in the October-November timeframe. While Sprott denies it in interviews, the size of the order itself may have been enough to sway the silver market, which is relatively small compared to the gold market. Certainly, when news of the gargantuan purchase leaked, it did affect the buying habits of a lot of investors.

Sprott believes, among other things, that the price of silver is undervalued because it is selling at a 50 to 1 ratio to gold. Therefore, the actual value of the price of silver should be a lot higher in terms of US dollars and eventually the market will have to reflect that dynamic. Even if Sprott is incorrect, and he’s won a lot of awards for being right, the policy set forth by the Federal Reserve indicates that gold and silver will continue their decade-long upward trend until at least the end of 2014.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

However, there is much more happening in the market, even this early in 2012, as Eric Sprott, the Canadian billionaire hedge fund manager outlined in a recent interview. Sprott made headlines in the silver world this autumn as he placed an order for $1.5 billion worth of silver bullion in the October to December timeframe. The quantity alone may have possibly moved the silver market, though Sprott denied this in a recent interview. The news, however, certainly did affect the market, even though Sprott Asset Management did its best to keep the deal quiet and avoid front running.

Now, Sprott is poised to make additional acquisitions in silver and his reasoning for seeing a great bull market is very compelling. The US Mint has been selling Silver Eagles on the same dollar amount they’ve been selling gold. That works out to roughly 5.6 million ounces so far in January, making January 2012 better than ten of the previous twelve months for silver. Because they’re selling as many dollars of silver coins as they are of gold coins at the Mint, it means they’re selling 50 times as much physical silver as gold.

Sprott is clearly very upbeat about precious metals, both as an investment and as a legitimate currency. He cites the imports of gold from Hong Kong into China in an interview with King World News. Up to about five months ago, imports into China were less than 20 tons a month. That number began a rapid curve up until in November China imported 102 tons of gold, which is staggering considering world mines output is less than 200 tons a month. Sprott see this as inevitably affecting the price of gold and silver going forward.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

This week’s development out of Europe is the latest piece of this puzzle coming together as bondholders failed to secure a deal which would allow Greece to borrow money at a reduced rate. They now must borrow at 4 percent, or higher, so the decision of whether the cradle of Western civilization will face a hard default is now primarily in the hands of private creditors. A hard default would place all European economies at serious risk. The possibility of a serious sovereign debt defaults in Europe just got a lot more real.

The result is a temporarily weak Euro as this bad news hit currency markets first and the Euro hardest. There is substantive concern among the biggest banks and hedge funds over the stability of the Euro, especially going forward in these next few months. The most recent to publicly state so is the head of sovereign ratings at S&P who said he believes “Greece will default shortly.” Recently, while giving an interview to an Italian newspaper, Jamie Dimon, CEO of JP Morgan, has said his bank could lose up to $5 billion from exposure to the European problem. Italy owns a great amount of Greek debt. JP Morgan’s persistent weakness is especially significant since the failure of MF Global due to exposure to bad European debt. The MF Global debacle provided all the impetus, political and economic, Dimon’s bank needed to fully hedge its bets and risks in Europe if not isolate itself from Europe altogether.

Most banks and funds have already hedged the Euro and the ramifications of a Greek default, and most have done so with gold and silver investments. It is the prime way to protect yourself against the Euro’s influence on the American dollar and all fiat currencies and profit from the current crisis. If the economy improves, commodity prices go up and gold and silver go up. If the crisis continues getting worse, precious metals will benefit from their traditional safe haven status as even more investors from all over the world flock to gold and silver.

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Shannon King

Senior Staff Writer - GoldSilver.org

Bass, a longtime buyer of gold and silver who famously took delivery on the University of Texas’ gold investments, has made quite a reputation betting against the grain and winning big. He’s one of the few who made a killing during the 2008 economic crisis and he profitably bet against the housing bubble which burst in 2007. He has also made several unpopular, yet accurate bets against the debt of sovereign countries, including Greece and currently Japan.

Of the current crisis in Europe, Bass recently had this to say: “Debt has grown in the last 9 years at a 12 percent annual growth rate. GDP has grown at 4 percent. So what do you expect when you have a pillar of the world community, the European Union, entering a prolonged stage of deleveraging. The rest of the world in the absence of private credit demand isn’t going to grow.”

During this stage of perpetual stagnancy, the inherent value of gold and silver makes the precious metals the only asset independent of the deleveraging in the markets. In the scenario Bass outlines, and he is making his projections based solely on the math of the balance sheets, any form of paper asset will quickly become completely worthless, especially those special investment vehicles we all know called derivatives. Tangible commodities, in particular gold and silver, will perform quite well.

Furthering his comment on Greece, Bass said, “I’ve never seen an orderly default process, I think it’s going to be a forest fire…it’s not the end of the world, it just means a lot of people are going to lose a lot of money.”

While a lot of people are losing a lot of money, Bass’s Hayman Capital is making money hand over fist, particularly because of their strategies with gold and silver. The paper burns. Gold and silver will last.

During the forest fire that Bass is talking about, which is already beginning with the recent announcement by the European Central Bank that they plan to inject 100 trillion Euros into the banking system next month, gold and silver will be the best assets to own and the only assets left standing.

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Shannon King

Senior Staff Writer - GoldSilver.org

Of particular interest is the “backdoor monetization,” as Dr. Marc Faber puts it, of the ECB. He is referring in this case partially to the decision in early December by the Federal Reserve, the Bank of England, the Bank of Japan, and several other powerful central banks to artificially lower the swap rate of US dollars, essentially making the cost of borrowing between banks free. Faber also believes that the ECB has already begun a program of debt-monetization through programs with other names, though as yet it is only an analysis. Like most fiscal policy we have seen in the past three to four years, this and others have not stopped a chain of events that today led to the downgrading of the French economy by S&P or the official Spanish unemployment rate to reach a staggering 23 percent.

In fact, there has been little gain from fiscal policy in the last few years except in the precious metals markets. Gold was up 10.16 percent last year, despite the correction occurring in December. Gold was up 24 percent in 2011. Gold is up 5 percent so far this year and we’re only halfway through January. It’s a fundamental fact that messing around with the value of fiat currencies, which can be done all too easily, directly adds to the value of tangible commodities, gold being the absolute shining example of a tangible commodity.

The December decision by the ECB and Federal Reserve was erroneously predicted to have an immediate and powerful impact on the price of precious metals. It did, but, unlike most predictions, it caused the price of gold and silver to float down as the Euro and consequently the dollar temporarily gained in world currency markets. Now, however, it appears that particular chicken has come home to roost as the European Monetary Union is in existential danger and member countries are being downgraded left and right.

The clear winners in this scenario are gold and silver. We very much hope that there is some resolution to the European problem in a way that benefits all involved by rewarding hard work, ingenuity, and excellence. However, currently, a realist would point out that none of those three virtues are to be found in the handling of the situation in Europe. Though it may take a few weeks to be made manifest, the problems of Europe will be a main driver of the price of gold and silver going ever higher this year.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Sprott’s Fund famously placed an order for $1.5 billion worth of silver bullion in the fourth quarter of 2011, a move that they tried to keep quiet. Of course, frontrunners got wind of the massive purchase and it literally swayed the market. As Sprott writes of Washington iniquity, inefficiency, and stupidity, he is making major moves in buying gold and silver. This makes him a good manager. Never wait for an external savior and never wait for the government to make a decision for you.

Sprott has done this, leaving behind the bureaucracy of fiscal policy for the value of precious metals. While many see QE 3 taking place in some form in 2012, there is no doubt that the price of precious metals will increase in value. That is why even major banks like Goldman Sachs, Credit Suisse, and JP Morgan have declared 2012 to be the year of gold and urged their customers to buy.

The position the Canadian billionaire has taken on silver is interesting, given he is such a big fish in the pond. Recent concerns stemming from the collapse of MF Global, disputes of rehypothection, and the menace of backwardation signal there is more happening in the silver market than meets the eye.

Historically, silver is the coin of the realm, dating back to the 1800’s when the silver dollar and silver coin was the method of exchange in the newly formed United States. While both gold and silver are sure to perform very well in a long-term bull market, the affordability of silver now coupled with these fundamentals make it a very interesting buy.

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Shannon King

Senior Staff Writer - GoldSilver.org

Gold is firmly above the $1,600 an ounce level and John Embry of Sprott Asset Management, the Canadian Hedge Fund famous for its third quarter $1.5 billion order of silver bullion, may be right when he says we will never again see gold at the $1,500 an ounce level. While gold breaks those technical barriers, a report has surfaced today that in the first ten days of this year the US Mint has already sold 4.3 million ounces in silver coins.

To put that number in perspective, in the first ten days of 2012, the US Mint sold more silver coins than were sold in all but two months of 2011. In January and September of 2011 the US Mint sold 6.4 million ounces and 4.5 million ounces, respectively. The critical reader will notice that the 6.4 million ounces sold in January reflect the strong silver New Year’s rally, previously mentioned. And the 4.5 million ounces in September is precisely the timing of the correction when the price of silver dropped over 20 percent, making the metal more affordable than it had been in months.

We are now in the first wave of exiting a similar correction and investors who have been waiting for the technical signs to proceed are entering the market in force. Gold is in safety zone and fully stabilized above $1,600 an ounce with every indication of moving even higher in the weeks to come. Silver, despite the US Mint selling more ounces in ten days than in ten of the months of the previous year, has certainly reestablished some ground, but current prices vastly underrepresent buying trends. Gold is reflective of the action in the market, but silver should be valued more highly and is currently selling at what amounts to a discount.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

In this sense, silver has some very different properties from gold. It is an industrial metal used in all new electronics, appliances, and even cars. Silver mines are actually in decline worldwide as the price of extracting the metal from the ground is comparable to gold, but gold clearly pays significantly higher per ounce. This makes gold mines more profitable right now than silver mines in some ways. Further, more silver is minted into coin each year than gold, and none of that silver is returning to market to fuel the industrial demand generated by, among others, developing economies in other parts of the world.

We may be facing a situation where the price of silver is extraordinarily undervalued given we have not yet realized how little silver is being produced and how much silver is being consumed. There is a report out today that investors in the paper market are paying a 30 percent premium over spot price for a PSLV that is nearer to the physical than a paper claim on a paper claim.

Again, this report brings up the name of the Canadian billionaire Hedge Fund manager, Eric Sprott, whose purchase of $1.5 billion of silver bullion in the third and fourth quarter made the whole silver market turn its head. If investors are willing to pay 30 percent over premium in order get just a little closer to the physical, it may be an indication that a serious shortage is somewhere in the system and is waiting only for a catalyst to blow up the entire market.

As we go forward in this bull market, we will learn more as the price-trending will give us more insight. However, the warning is rather serious and displays a tremendous investment opportunity. There could be a serious problem in the paper silver market that is currently in the beginning stages of unraveling. Gold and silver will both show serious gains if any of the troubles in the paper precious metals markets come to light.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The same mistake of thinking the market had entered bear territory was made and the belief is currently being recanted in the gold market. Any investor or analyst who went on television or tweeted that the gold bull market had ended, including those who foolishly sold their positions and liquidated their gold, is currently changing their story faster than a politician. The gains seen in gold this week make the temporary illusion of a bear market unpopular, even though the fundamentals always indicated we were, are, and will be in a precious metals bull market for some time to come.

The silver market has suffered a bit more on the news because of the way it looks on the chart. Seven months of decline doesn’t look good on anything. However, the fundamentals in place for the gold market are the same in the silver market and the price disconnect may indicate there are more gains to be made in silver. James Turk has reiterated a concept that silver may be the next Apple. Apple stock famously went from below $30 a share in 2004 to its current level above $400 a share. Before its steep rise from 2008-2009 on, Apple had very much the same kind of resistance and protracted loss. Pinpointing the winners that have this type of gain before the curve begins makes fortunes.

Silver, which is currently breaking through the supports at the $30 range, has the potential to outperform gold based on its current price levels. Analysts are comfortable enough with the end of the correction to begin again making price projections, including Citi, which has put out a report projecting gold at $2,400 an ounce. Based on that gain, the silver to gold ratio, currently at 55.4, would put silver at $43.32 an ounce, which is far lower than the recent all-time highs in late August-September.

The silver to gold ratio will, as the bull market continues, begin to correct and place silver at a much higher price. Historically, the ratio has been as low as 8:1, and while a projection of silver reaching that ratio to gold is a bit protracted, the overextension of the ratio cannot allow much more distance between silver and gold, possibly making silver a better performer this year than gold.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The biggest news, however, came from the silver market, which showed a 6.6 percent increase, the biggest single day increase in three years. Such a significant increase in the price of silver very nearly negates the possibility of the bottom falling out of the market absent intervention and very nearly ensures the upward trend will resume.

Differences in supply and recent heightened demand, both on the physical market and the move from paper to physical market, have made such wild cards as the bottom falling out a possibility. We have seen such corrections and decouplings several times since 2008, and since that market change the possibility cannot be ruled out. However, with yesterday’s action in the silver market little concern remains.

It is more likely, for the purposes of argument anyway, that the banker’s bonuses, which are dispensed at midnight on December 31st, went straight to silver on Tuesday as they have been doing for the previous few years. While it is only conjecture, it is said that these bankers only take physical silver and they only take delivery.

If that was their bet last December 31st, those bankers made a startlingly good investment for the year. Aside from gold, silver was the single best investment of the year before the correction, which brought the price from nearly $50 an ounce in late August-September to $27 an ounce prior to the trading session on Tuesday. Buying now at $27 an ounce will be a startlingly good investment come New Year’s Eve.

It is unclear at this juncture whether the New Year’s pop will last for a few more trading sessions or become the basis for the New Year of precious metals. We will see that dynamic work itself through over the next week. However, silver is a great buy in this market, especially at these prices. Gold and silver will end 2012 significantly more valuable at market than for what they can currently be bought.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Fundamentals in the market are still in place for a long-term bull run, despite what the television pundit of the moment says about it. George Soros, though he is good at making money, is probably not the most trustworthy individual when it comes to free advice. This is the guy who was calling gold “the ultimate bubble” in 2009-2010 even as he was buying it in record amounts.

Current Federal Reserve policy, which it has publicly announced it will maintain “indefinitely,” is to keep interest rates near zero. This has banks, including Goldman Sachs, Credit Suisse, and Societe Generale, advising their clients that the gold market will perform quite well through 2012 at least.

The current relatively low price of gold is possibly the best entry point we will see for some time and is the best we’ve seen for months. A deeper correction is always possible and unpredictable given actions taken regarding the European problem, but a long-term market all but guarantees a return on investment.

2011 was a sluggish year, to put it mildly, for markets. That’s part of the reason more derivatives were created in the first six months of the year than at any other time in history. While all that literally valueless paper might inflate the markets temporarily, it is, at best, questionable fiscal policy and we run the real risk of seeing markets catch on fire in 2012 as they realize the bulk of their constitution is junk. During this time, gold and silver will shine, protect you and your family, and provide the basis for any return to real market value.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Silver is an industrial metal. In addition to being a monetary metal, as is gold, silver is a vital component in electronics from your cell phone to computers to cars. The silver that goes into most electronics is never recovered. The silver that gets minted, and the US Mint has been selling out of Silver Eagles for a few years in a row now, typically doesn’t resurface for use in industry. This leaves quite a demand gap for industrial silver for use in machinery, electronics, and advances of the modern world.

The developed nations, specifically China, have produced a stir in silver because they are such big markets. China accounts for three quarters of the world’s gold market. China used to be a net exporter of silver, but it is now a net importer of silver and will continue to be through 2012. Talk of China’s economy slowing may be accurate and may not be. Analysts seem almost split down the middle. But China’s economy is so massive that even a considerable slowdown would produce enough demand for silver to propel the price higher.

Interestingly, renewable energy technologies rely very heavily on the industrial use of silver. Silver is a vital component in solar cell technology, which continues to gain ground going forward. Rapid-rising Asian economies with an eye to the future are diversifying their energy consumption strategies to include the renewable energies and that will, in time, exponentially increase the demand for above-ground, usable silver.

Recent price dips aside for the time being, the future of the precious metals is looking very good. Considering the technologies we’re now seeing in the process of definitely coming to market, silver may even outperform gold and it is strongly advisable, based on the macroeconomic trends alone, to own some silver with your gold.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Investors are protesting as well, just in a different way and to a different degree. Since 2008 when most of the sheep got shorn, there has been less noise from the floor of markets. Investors are still making money, though the money they’re making literally is buying their future out from under them.

Those smart enough to invest in gold and silver are much better off and they know it. The prices of gold and silver have been somewhat distracting over this year. As an inherently volatile investment, the precious metals often make would-be investors uneasy, though with the behavior of the Dow in recent months, precious metals can actually seem mild. We have experienced a 20 percent correction in gold in September and a 15 percent correction this month. The metal is still up on the year, as it began trading on January 3 of 2011 at $1,415 an ounce, but we are currently in a price dip that distorts the actual performance of gold. This end of the year price dip is reminiscent of the beginning of 2011 when the price of silver skyrocketed and several news sources cited that bankers were using their end of the year bonuses to buy precious metals, though there is no way of knowing if that is more than rumor.

Having watched the markets the way I have, it would not be surprising at all if at the end of the year the price of gold and silver temporarily dips as bankers, investors who know what they’re doing, and those in the know increase their positions in gold and silver. Take advantage of the current low prices in gold and silver. As we have seen in the recent years, there will most likely be a post-holiday bounce or possibly even a major wave up that will take the prices of gold and silver much higher.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

When economies are a little cooler, the action in the silver market is not appreciated quite as much, though there may be a lot going on. A report today highlights the way the silver market has become so overstretched that physical demand is simply impossible to fill and prices, subsequently, are not realistically indicative of the silver market. King World News cites a “London Trader” who explained that deliveries “of size” have been taking “three weeks plus” to be filled prior to the recent action by European banks and this portends an extremely overdrawn silver market going forward.

There has been a lot of talk about silver and gold moving below the 200 day moving average, but as the trader explains it is more concerning right now if they should move back above the 200 day moving average. The market simply could not handle it. “There is nobody in COMEX silver contracts anymore, other than casino players,” he explained. “The only way they have been able to keep silver depressed is by borrowing silver from SLV to meet immediate demand. That’s the only reason silver isn’t trading $10 to $15 higher right now.”

Stated plainly, that’s what’s happening in the silver market right now. In order to meet the immediate demand, they are borrowing from other markets to fill physical silver contracts, which are already late, and they’re doing so at such a rate that it is literally depressing the price of silver. That makes the price of silver today an incredible bargain.

“There isn’t enough silver for investors to buy….The silver isn’t there,” the trader, speaking the SLV contracts that currently have no underlying physical backing or access to physical backing. It’s really a precarious spot for those particular market entities, but for silver investors it’s an incredible opportunity if you see and understand what’s happening in the gold and silver markets and take advantage by purchasing some silver now while it’s undervalued.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

December 23, 2011 - Despite all the recent concern and talk about the gold and silver market possibly entering bear territory, investors and buyers could just look at the numbers. Technically, a correction is at least a 20 percent move lower in price. We are now around 15 percent on the month in gold. Nouriel Roubini’s twitter account aside, gold is already rebounding and the fundamentals in the market have not changed since last month.

It’s also something to keep in mind that following the September correction, central banks began buying gold in record amounts. Central banks have not bought gold in the quantities they did in the third quarter of this year since the end of Bretton Woods in 1971. If the people making the fiscal policy are buying gold, it deserves some consideration from you and I.

Now, let’s assume I bought gold in 2008 after the collapse of Lehman Brothers. The price dipped after that crisis, surprisingly to $681 an ounce. If I’m looking at 15 percent drop on the month, I’m still a very happy investor with gold at $1,607.40. Every ounce of gold I bought then earned me $1,000, just by being. I like those numbers.

So, all this talk about a bear market, Dennis Gartman selling his gold, and the price of gold dropping 15 percent doesn’t really matter considering gold is still up roughly 14 percent from the 2010 settlement at $1,421.40. If you bought gold last year, your investment is still performing. And gold is not only the best performing asset of the year; it is the best performing asset of the decade.

As a bit of insight into the future, consider now that the problems in Europe have not reached an equitable solution and for all intents and purposes are still pending, despite all the billions that have been thrown at the fire already. Each time a bump in the European road comes along, investors across the planet have to find instant liquidity and a lot people have been doing that in the past three months by liquidating their positions in gold. Unfortunate for them as investors, but that’s generally what has to be done when their paper goes bad. They have to sell the thing that actually has value—gold.

Gold and silver are set to perform quite well in the coming months and that is becoming increasingly clear in the markets.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Occasionally, there is a correction in the market. This is constituted of a shift downward in price that is considerable. In the past decade, there have been three 20 percent downward corrections in gold. Each time a correction occurs, investors scream about the sky falling, run in the wrong direction, and lose their positions because they weren’t paying attention to the fundamentals. Three times in the past ten years gold has corrected downward on the order of 20 percent. Each time it not only rebounded, it performed better than ever, making it the best performing asset of the past decade.

The fundamentals are key indicators as to what will be happening in the market in the future. Right now, because gold has lost about 15 percent in a month, many advisers are calling the top of the market and, though none dare use the word, effectively a bear market, which is ludicrous. However, looking at the pervasive low interest rates, one must admit we’re still in a gold bull market. The interest rates are pervasive because they are here to stay. The Federal Reserve cannot currently raise rates without endangering the fragile economy. This makes owning dollars a losing game as they literally depreciate in the account.

With dollars depreciating in savings accounts due to interest rates that literally can’t be moved and an economy that has come to function only with the aid of fiscal stimulus makes for a logical trust in gold and silver. Forget the correction; keep sight of the fundamentals. However this all works out, gold and silver are set to be much more valuable than dollars.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

This is indicative of what many in the field fear will become, or already has become, a far-reaching trend of banks using customer capital to back the ever-riskier investments they must make to chase diminishing returns. As such, the financially vapid term “rehypothecating” may be here with us to stay. All it means, of course, is, “other people’s money,” but robbery by any other name seems more professional.

By definition, it consists of the commingling of accounts, which is financial heresy. Since time immemorial the commingling of accounts has been a punishable offense for a business. If lawyers can manage to keep accounts separate or face losing their license to practice law, why is the CFTC, a governmental body, specifically issuing rulings that allow banks to commingle customer accounts?

As for gold and silver investments, they, too, are not safe in the hands of big banks who can and do use them as collateral for the same type of risky investments that took down MF Global. Right now a lawsuit is pending between MF Global and JP Morgan concerning which bank actually owned tens of thousands of contracts representing customer gold and silver.

This is over and above the $1.5 billion that MF Global has customers “may” see again. Banks are using customer accounts to finance questionable debts. If you’re currently holding gold and silver in a customer account with a big bank, it too is being used and can very easily be lost, just as the customers of MF Global are discovering.

The solution is to make investments in gold and silver with a trustworthy company that won’t be using your account to finance outrageous speculation and bad bets. Further, it is highly advisable in this day and age to take physical delivery. Understanding some investors want their money a little closer to institutions, the more modestly sized the organization, the better, generally, for your gold and silver investments.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Kyle Bass tends to put it very directly. In an interview this week, he said, “My opinion is very simple as a fiduciary…to the extent that you own gold and silver you are going to own it a long time—it’s not a trade.” As a long-term investment, every analyst knows that gold and silver are the clear winners in a projected market. Centrals have been buying gold and silver in record amounts in the third quarter of this year and now that the price has dropped, as it did in September, we can assume they are currently buying gold and silver in record amounts.

Further, key banking institutions, Goldman Sachs included, have released reports identifying gold as a very strong position through next year. The fundamentals all indicate that gold and silver still have a way to go, but the Kyle Bass’s kicker comes in the form of a physical delivery. Gold and silver trade in paper markets on a fractional reserve, at many multiples of the underlying physical. When Bass looked at the ratio, he decided to hold his gold himself.

“When I talked to the head of deliveries at COMEX NYMEX, I was like, ‘What if 4 percent of the people want deliveries?’ He said, ‘Oh Kyle, that never happens. We rarely ever get a 1 percent delivery.’ And I asked, ‘Well, what if it does happen?’ And he said, ‘Price will solve everything.’ And I said, ‘Thanks, give me the gold.’”

You’re going to own if for a long time. Buy your gold and buy your silver. Get your gold and get your silver.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Because it is an industrial component, silver is poised to make advances we may not see in gold. Given central bank intervention and the current problems confronting world markets, it is far more preferable to own some precious metal, no matter which. But, when comparing precious metals, it is important to consider that silver is a vital component in cell phones, computers, and cars, among other things. Above ground stocks of silver was around 24 billion ounces in the 1970’s, but has declined to between 18 and 19 ounces today while industrial use of silver has continued to grow. There’s 50 cents worth of silver in every cell phone and none of that silver is coming back to market.

For the whole of the past generation, more silver has been consumed annually by industry than has been mined. Industrial output has increased, but many mines are now in a state of decay and fewer new mines are being opened. It takes ten years for a new mine to go from discovery to a mine producing a single ounce of silver.

According to a recent report from Future Money Trends, it is getting harder and harder to mine silver, and there are ten ounces of silver mined in the world for every one ounce of gold. However, there is a currently a trading ratio of 53 ounces of silver to one ounce of gold, indicating that silver is currently very undervalued. At just over $30 an ounce, silver is extremely undervalued right now.

Add on to that the fact that silver is traded on a fractional reserve basis, meaning there is a lot more silver existing on paper that is actually in existence, and you have a serious discrepancy in the actual value of the physical metal. Given these factors, silver is poised to perform very well in future markets, perhaps even better than gold, and is deserving of further consideration when you’re buying precious metals.

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Shannon King

Senior Staff Writer - GoldSilver.org

Often, gold takes a precedent over silver as it can be more attractive and it is more valuable. It is now being reported by Future Money Trends that based purely on fundamentals, the likelihood of a rise in the price of precious metals, silver particularly, is very high. The reason is because the amounts of gold and silver coming to market simply do not meet the need manifesting.

“There simply isn’t enough physical silver to deal with the demand of a fiat currency crisis,” the Future Money Trends report stated. That is the truth. The second there is a fiat currency problem the prices of gold and silver will skyrocket, if you can buy them at all. It has happened several times before in the history of this nation. The summit in Brussels this past week has yielded no actionable material concerning the European debt crisis and some published reports now place the Euro in danger of becoming an international currency crisis.

It was leaked weeks ago that Germany has been making contingency plans for the failure of the Euro. This should be relatively expected by a major world power. One would hope they have a contingency plan for major events. But, that they recently concocted this plan and it was recently leaked demonstrates the prescience of the European issue and the risk it poses to the global system.

There is not enough gold and silver in production to satisfy demand. The possibility of a fiat currency crisis grows more real with each passing day and each failed attempt to resolve the European crisis. While buying gold and silver makes sense to hedge your investments and maximize your return in the future, it may also make sense to buy gold and silver now in light of these startling facts.

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Shannon King

Senior Staff Writer - GoldSilver.org

In a bid to do something about the European sovereign debt crisis, a summit in Brussels has led to a key rate cut at the ECB. They have also made it much easier for banks to borrow from each other, signaling that extensive measures are being taken to deal with the European debt problem.

Temporarily, this has provided for a drop in the prices of gold and silver. Gold drifted about $30 and silver a little over $1 following the announcement of the ECB. Keeping in mind that this summer we saw the price of gold over $1,900 and the price of silver around $50, the current prices at $1,730 and $31 are appealing levels for entry.

Eventually the debt problems in Europe will force the prices of gold and silver to rise again and to rise dramatically. The selling on the news of any potential rearrangement of the Europe problem is to be expected. However, barring further news or other factors, the European sell-off should be brief.

This makes quite an opportunity for investing in gold and silver. Central banks, it was reported recently, began buying gold at forty-year highs following the drop in prices from above $1,900. During the third quarter of this year, central banks, probably including the European Central Bank, were net-buyers of gold, demonstrating there is more to come from the precious metals.

Further, major banks such as Goldman Sachs, Credit Suisse, and Societe Generale have been circulating recommendations for gold to their clientele, citing the persistent low interest rates in the US as indicators that gold will perform well through 2012. If the US interest rate is any indication for these banking institutions, the European interest rate cut will also signal good times for gold.

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Shannon King

Senior Staff Writer - GoldSilver.org

The price of gold and silver, even as a summit meets in Brussels to attempt to resolve the European sovereign debt crisis, is reflecting the move by Standard & Poor’s. The action triggered long liquidation, which put downward pressure on the markets.

This movement of the metals is slightly different from what some analysts were predicting after last week’s Federal Reserve agreement with central banks around the world to swap dollars at a lower rate. Indeed, the week did start with precious metals, gold and silver, taking a pop at open, but very quickly these other factors weighed on the price.

All downward moves in the price of gold and silver in this market signal buying opportunities. The long-term trend line still shows gold and silver outperforming every other asset. Gold has been running circles around stocks for years now and has had a 600 percent decade. In that kind of dynamic, buyers ask simply what is the price they would like to purchase gold and silver at.

There is some talk of market fundamentals opening the possibility for a correction, or significant move lower in price, but it is as yet unquantifiable and only a possibility. Even if a correction did occur, as one did in September, it would still, in this market, represent an opportunity to get in. It was recently reported that central banks bought gold following the September correction at forty-year highs. They are still buying gold.

Whatever the effect of the summit currently meeting in Brussels and whatever subsequent economic policy, if any, they put into effect, gold and silver will continue to outperform all other assets as a long-term investment. Any decrease in the price of gold and silver is an excellent opportunity to purchase.

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Shannon King

Senior Staff Writer - GoldSilver.org

The dust is in actuality silver silicon powder and will allow for a substantial evolution in battery technology. This would have far ranging effects in the field of technology, but also in automobiles. The powder works by assisting the movement of lithium in the battery cell, effectively making batteries more powerful and longer-lasting. The battery technology currently in operation is a limit on what we can do with electronics. We can have extraordinarily powerful computers, but we can distribute it if it stays within a power threshold.

Often, in the field of finance and investment, silver is forgotten as an industrial metal. While gold is used in industrial applications to an extent, silver is far and away a more competitive industrial metal, partially because it is more affordable and partially because it is more available throughout the world. Silver also has some properties that make it particularly effective with electricity, as apparent in this new development.

Keep in mind, as you invest in gold and silver, that uses for industrial metals change and evolve over time. You never know when we will find the next technology that will require a much larger percentage of the tonnage of the silver produced on the planet. Of course, this is good for all silver buyers and investors because the price of silver will rise across the board.

Silver is currently down about 2% and about 30.34% below its fifty-two week high. This alone makes for a good buying opportunity for silver. Despite silver’s recent highs in 2011, which were so considerable that the US Mint suspended some of its proof sets, we still have not yet seen the value highs that we experienced in 1980.

With ever-evolving technology that will require industrial metal and a precedent of much higher prices, silver could go very far.

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Shannon King

Senior Staff Writer - GoldSilver.org

This move is viewed by many as a balance sheet method of coping with the European sovereign debt crisis. While it is impossible to know definitively if that is the primary purpose of the program, we can look to history to tell us what happens when governments meddle in the price of currencies.

Since the beginning of the economic problems that we now know, there has been a several hundred fold increase in the price of gold. There has been a 600% increase in the price of gold for the decade, meaning the precious metal has been performing since before the crisis. Fiscal stimulus, in addition to whatever the government promises it will do, has had the effect of increasing the amount of dollars in circulation. More dollars means more money for gold.

The M2 supply has been a clear indicator for traders such as Jim Rogers. Over $600 billion has been injected into the system by the Federal Reserve board of Governors since July of this year. Clearly, something is happening. Now that the central banks have uniformly decided to lower the swap rate for US dollar exchanges, there is further reason to suspect that federal intervention in the market will positively affect the precious metals.

Gold and silver investment may be the smartest and sanest move to make right now with both the Fed decision and the crisis in Europe. The collapse of Jon Corzine’s MF Global should be a lesson to us all that no American institution is immune from Europe. Jon Corzine, former Governor of New Jersey, will be called before congress to answer questions regarding his role in the collapse of the bank that he ran, which should tell you that there is more trouble in the banking sector that we could make up or embellish. Gold and silver investments are the protection we all need from this banking crisis.

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Shannon King

Senior Staff Writer - GoldSilver.org

Because Sprott today represents half the size of the Hunt brother’s buying power in their attempts to corner the silver market of 1979-1980, people are taking notice and the silver market is reacting. The last time Sprott’s Physical Silver Issue made the news was because of a $580 million order that helped propel the price of silver from $18 to $50 in five months.

Sprott has a very impressive record when it comes to buying silver at the proper times, but it must also be considered that he is such a significantly large buyer, and is buying in such significantly large quantities, that his activity itself will affect the prices in the silver market. Recently, Sprot has said that the paper market is totally disengaged from the physical market, with physical gold and silver trading on factors other than the physical. This would hamper, to an extent, the effect such significant purchases have on the prices in the paper market, but physical supply will be definitely affected.

John Embry, Chief Investment Strategist of Sprott Asset Management, sees current trends as the establishment of the fundamentals needed for the next wave up. The May correction in silver has pretty well established a good buying opportunity and Sprott is walking his talk. The investment house sees silver rising over a $100 an ounce in the coming year. Sprott himself has said that the price of silver will go much higher.

Compared to the action of markets, these fundamentals are promising. Embry compares it to “1981, after those huge interest rates, a lot of smart guys positioned themselves in the futures market for big move in the bond market. Just before it started there was a huge counter-trend rise.” The bond market, for example, can and has exhibited much more unpredictability and violence. The lesson is clear that precious metals are more fundamentally tied to a physical production that keeps them in line with sensible trends.

Gold and silver investment is widely regarded as a sane place to be in this market, considering the economic problems threatening institutions here and abroad. Given the activities of players as big as Sprott Asset Management, gold and silver as investments are not only the sane place to be, they are the smart place to be right now.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The debt crisis in Europe is again making headlines, including some well-placed voices at Bank of France and Goldman Sachs. These sources have actually called Europe a “true financial crisis” and predicted “the failure of the Euro project.” As Germany continues to make plans that demonstrate its unwillingness and political inability to further fund European bailout deals, there is progressively less and less reason to expect a quick and easy end to the crisis. While devastating to confidence and sentiment in markets, gold and silver investment has steadily gained as a safe haven and hedge against European troubles.

In the United States, it was recently reported by the Bank of International Settlements that that notional value of OTC derivatives has skyrocketed $107 trillion in the first six months of the year. Derivatives are widely held to be the principal root cause of the current economic crisis. Considering the total amount of outstanding derivatives now stands at $707.5 trillion, and was at a record of $693 trillion in 2008, the current manufacture of derivatives by banks at such an astounding clip foretells that our problems have not yet been resolved by the actions taken in government bailouts, legislation, or recapitalization.

Derivatives began their astronomical rise about ten years ago—the same time that the price of gold, and subsequently silver, began its uptrend. There are several reasons, historically and technically, to see the price of gold linked to the popularity of derivatives. If the derivatives market is any indication at all, the price of gold and silver is set for another major wave up. Certainly, the sovereign debt crisis in Europe and the numbers coming out of the markets in the United States support further upward action in the precious metals market. Gold and silver investment is certainly the smartest option out there right now.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

A Canadian billionaire Eric Sprott, CEO of Eric Sprott Management, has filed a prospectus for a purchase of $1.5 billion worth of silver bullion. That’s a lot of silver. Market analysts spend a lot of time talking about gold and meanwhile, to an extent, ignore the activity of silver. Sprott’s move represents a very large player in the market taking a big piece of the pie. Sprott’s order, which will likely be filed in December, will significantly affect the amount of silver available for purchase on the open market.

This move by the Canadian billionaire echoes the activity of central banks this past quarter. Recently news emerged that central banks bought more gold in the third quarter, and are on track to purchase more gold in the fourth quarter, than they have bought in the past forty-years. Following the September correction, central banks swooped and in started buying up precious metals at multi-decade highs. This is a signal as to where the market will be headed in the coming months as third quarter reports came out just over a week ago and central banks are major players in the precious metals market.

Eric Sprott is just following the trend line and making the smart trade by purchasing silver. Central banks know what’s going on and the relative suppression of precious metal prices that are occurring right now may reflect the best buying entry point that we will see for a long time. Both central banks and investors are reacting to the clear opportunity by purchasing gold and silver, front running the market, which will reflect this activity in the coming months.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Many questions arise as to why the gold market, as has generally been true in the past, has not reacted suddenly and strongly to the dramatic fall in stocks. While gold and silver prices have many contributing factors, some of which involve considerable time compared to stocks, usually large drops in the Dow and other major markets register timely gains in gold and silver.

One must keep in mind, however, that the currently losses in the markets stem from a sovereign debt crisis in Europe. While we have experienced the bankruptcy of MF Global, it is generally true that the European crisis has not landed on US shores in its full form yet. Therefore, other markets are reacting the in the ways they know best. Currency traders are very closely monitoring the situation and attempting to profit off it by playing the euro versus the dollar.

Though this is essentially like playing a zombie against a vampire to see who falls first, it is nonetheless temporarily providing strength to the US dollar. This is suppressing the price of gold because it requires fewer dollars to purchase the same amount of gold. This would be the classical definition of a buying opportunity and it generally is a very good buying opportunity now.

There’s a slight lull in the news out of Europe and certainly the holiday in the US has put things on hold for a bit so prices will probably stabilize at least through the weekend. Picking up a few extra ounces right now, or taking advantage of the gold and silver prices available right now, is an especially good idea. Your friends and family, with whom you share a wonderful Thanksgiving, probably won’t appreciate a plasma screen bought tomorrow that is worth nothing in a year. They will appreciate your taking the opportunity in gold and silver prices to buy now.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Americans are a smart people and they know that enough is enough in the banking sector. Banks cannot be trusted to act responsibly and Washington is the last place to put your dreams. Ironically, the failure of the Congressional Super Committee to reduce the budget deficit, which it was explicitly formed in order to do, will probably benefit the price of gold and silver. The political mismanagement of the economic problems are yet another signal to Americans that it is time now to move your money to a solid asset with an inherent value that has been the best store of wealth since ancient Rome.

Gold and silver are the natural antidote to the problem we are facing as a nation, politically and economically, and Americans know it. Interestingly, it is also young Americans, who have seen several boom and bust cycles in the market and have a somewhat more skeptical attitude toward traditional investment, that make up about half of the new investors in gold and silver.

The numbers say they’re right to do so. Central banks, it was reported this week, have hit forty-year highs in their gold buying. Gold is up 21 percent year to date and has outperformed the S&P by 24 percent. And from January 2010 to June 2011, silver increased more than 100 percent while gold increased 34 per cent. Gold and silver has been, is, and will be the place to be.

In answer to the question, how to buy gold and silver? Any way you can.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Regardless of inherent value, it is true that the political and economic troubles around the world, generally, lend to a very optimistic outlook for gold. The best performing asset of the past twelve months may have a long way yet to go given that there is still a sovereign European debt problem that has a direct impact on the balance sheets of banks in the United States. News out of Europe has been quieter in the recent days, but the underlying issue has to be dealt with and it should be taken into account when evaluating the markets.

It was, after all, a bad $6.3 billion bet on European debt that brought down Jon Corzine’s MF Global. Make no mistake about it, that bad European debt is on American bank’s balance sheets and eventually banks will have to deal with it in some form or another. In the meantime, however, American savers are reacting to the bad news from the banking sector with increasing distrust for all things paper. There are reports from CNBC that customers are pulling their funds in response to the MF Global collapse and subsequent missing customer funds because they distrust banks.

At the same time, the Congressional Super Committee in Washington has reached a point of epic failure and has had to admit it. They have been unable, despite giving the power of Congress to a mere twelve people, to effectively reduce the budget deficit at all. The United State now has a $15 trillion budget deficit and there is no politically salable answer to it.

For gold and silver, these are huge macro indicators that more and more people will move to precious metals in the coming months. As the European problem continues to drag in American banks and Washington continues its junk fiscal policy, the supports for a strong presence in tangible commodities grows and gets stronger. The gold and silver markets, on a number of levels, show themselves for what they truly are under these conditions. They are fundamentally sound money that is good no matter what bankers or politicians do in Europe, Washington, or New York. Make your money the good money. Buy gold and silver.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

November 21, 2011 - This week, among other things, the US National Debt reached the $15 trillion mark, which, if not dealt with effectively, signals gold and silver investment will be pay off well in the time to come. Yes, $15 trillion USD. That’s $48,000 for every man, woman, and child in the United States. This year, the US will spend $1.3 trillion more than it takes in.

The United States Congress Joint Select Committee on Deficit Reduction, known as the Super Committee, was created just this summer and tasked with dealing with this debt effectively. The Committee consists of twelve Congressmen and, in theory, can function quicker and better because of their increased power and smaller numbers.

However, as with so many things in Washington, the Super Committee seems to be taking longer than expected and is not saving as much money as promised. The deadline for the Super Committee to come up with a deficit deal is Wednesday, but there is also a preliminary deadline Monday at midnight. The Democratic and Republican co-chairs of the Super Committee are now looking to draft a joint statement declaring their failure to reduce the budget deficit in the manner and time they had promised.

This is, however, good news for gold and silver investments. It can be reasonably projected that American buyers will continue to move their money to tangibles, the most popular of those being gold. Uncertainty over the budget and gridlock in Washington signals that the government will not be doing anything soon, if ever, to combat the spending problem in Washington and thus metals won’t back off their bullish track.

This comes even as safe haven demand has seemingly fallen both in Asia and western markets. The majority of the gold buying is not yet being done by new investors but is being done by existing clientele who are thickening their portfolios. The ratio of precious metals owners is comparatively tiny with about 3 per cent of the American populace actually owning physical precious metal.

This is good news for owners and for prospective owners. It shows that no matter what happens in Washington gold will still hold its value as it has since the days of Rome. And it shows that if you’re considering gold and silver investment, it’s not yet too late to get in.

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Shannon King

Senior Staff Writer - GoldSilver.org

A common motto that the group has adopted is “We are the 99%,” referring to the fact that the vast concentration of wealth on the planet is actually held in about 1% of the population. I have read estimates that it’s actually much less than 1%, but the fact remains that the identifiable motto refers to wealth, wealth distribution, and monetary policy.

Regardless of what you think about Occupy Wall Street or where the movement might be going, one finds several similarities in the activities of investors in gold and silver. While with a 25% year to date gain, the price of gold itself has been enough to bring smart and quick investors into the gold market in the past 12-24 months. There is a considerable part of the gold market that specifically chooses investing in precious metals because they are effectively taking control of their own money and taking it out of the reach of bankers who have consistently proven that our once venerated banking institutions are now, possibly, less dignified than the mafia.

While gold has long been the store of wealth in society and the measure of all other wealth, it is heartening to see many people, including many young people, understand silver is an affordable and effective method for beginning their life’s accumulation of wealth.

Are not gold and silver investors accomplishing the idealization of Occupy Wall Street? They are returning to sound money, removing their money from the reach of bankers who would use it to enslave them, and draining the real foundation of a globalized and unbridled banking system that has lost all control over itself. Gold and silver investing is now possibly the best of what Occupy Wall Street stands for.

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Shannon King

Senior Staff Writer - GoldSilver.org

There has been some discussion about President Nixon’s decision to remove the US dollar from the gold standard in 1971 as a disengagement from the gold silver ratio. While it is certainly the case that disengaging the dollar from precious metals made the dollar a wholly paper currency, it does not follow that the paper currency would have the power to affect the relationship between gold and silver.

Gold is far more finite substance, with less of it being available in the earth and less of it having been mined in history. This produces a relative scarcity compared with silver and consequently a higher price. The value of a paper currency cannot affect that scarcity ratio. This is one reason why the gold silver ratio is a very good indicator as to what is really happening in the physical markets beneath the noise of the paper markets.

This morning, with gold trading at $1,775.20 and silver trading at $34.47 an ounce, there is a current silver gold ratio of 51.499.

All indicators, such as low interest rates and negative real interest rates, suggest that gold will gain in value and thus silver is currently vastly undervalued. An analogy would be if, historically, it was worth one cow to buy sixteen sheep and suddenly one cow could buy fifty two sheep. That is the kind of price differential we’re looking at in the gold and silver markets. This suggests very strongly that silver has a long way to go in real terms to catch up to the value it rightly deserves per a measurement that has been good for thousands of years.

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Shannon King

Senior Staff Writer - GoldSilver.org

Not according to a Forbes report that cites MF Global may have used customer funds in a $6.3 billion bet on European sovereign debt. This was made not only possible but legal through a CFTC ruling that states the use of customer funds shall not prevent any investment.

That might be a good idea if the investments made had a return. Clearly, European debt was not the place to be putting other people’s money.

In the minds of most people this is an instance of adding insult to injury as savers who have worked hard all their lives watch the purchasing power of their savings dwindle steadily. Low interest rates that are here for the long term and negative real interest rates have been punishing savers. A recent report out of Britain shows that savers have been looted of $43 billion since the start of the crisis. This is a wakeup call to Americans when we consider that Britain has not experienced anywhere near the level of fiscal stimulus and monetary intervention we have experienced in the US.

Meanwhile, the price of gold and silver has reflected the bad monetary policy of both banks and governments. With a 25% year to date increase in value, gold has proven again its historical place as the store of wealth. What’s been true for thousands of years is true now.

Bankers cannot dilute the purchasing power of the gold you buy and hold the way they can and do dilute the purchasing power of paper instruments. Low interest rates and negative interest rates have been cited by cited by Goldman Sachs and Credit Suisse as positive indicators for the price of gold and silver.

As banks continue, even in the face of Occupy Wall Street, to make financial decisions that disrespect their honest and hardworking customers, more and more of us will continue protecting ourselves by buying gold and silver.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

While the financial crisis in Europe is generally acknowledged to be affecting the price of gold in real time, no one knows how and when the process will play out, making it incredibly difficult to plan for in advance. The real interest rates in the US is a much more reliable indicator of the future behavior of the markets and an excellent indicator of the performance of gold in the coming twelve to sixteen months.

Goldman Sachs is not alone in its forecast, either. Credit Suisse cited real US interest rates as a “key driver” for the price of gold to extend over the $1,800 mark in the coming days.

Goldman’s call options for gold are currently at $2,000 an ounce while the spot price $1,778, underscoring Goldman’s expectation for gold to perform and perform well in the coming weeks. With regards to silver, Goldman cites the historical silver to gold ratio, linking good performance in the gold market to likewise performance in the silver market.

Investing in gold and silver has been a well-recognized strategy with the current year to date price of gold up 25% in US dollars. Goldman’s report reflects not only the potential but the near necessity gold has of growing further in the future in response to monetary policy in the United States. The price of gold and silver will continue to climb due to real US interest rates.

Investing in gold and silver is now the clear intention of smart money.

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Shannon King

Senior Staff Writer - GoldSilver.org

So, then, why is China, already the world’s largest gold producer seeking to own gold mines abroad? The megalithic economy is well known for taking a very long view of the future and China’s investments around the world are legendary, partly because it is so difficult due to governmental regulations to invest in or hold assets abroad.

When China makes a move, it therefore does so with a multi-decade view of a return on its investment. While there are talks between China and Canada for purchase of gold mining operations in North America, the likelihood of an attempt to corner the market is nil and if possible would not quite explain China’s choice point.

Indeed, China’s focus on strategic minerals is legendary and accounts for a lot of its investment in the continent of Africa, but the country’s fifty year plan probably reveals a lot more about the future of gold and silver investing.

To be clear, gold and silver prices will not immediately reflect a decision by the Chinese to invest in gold mining operations abroad, but it is a clear and strong signal as to the progression of gold and silver investing over a very long term in the future.

This kind of activity is very reassuring to gold and silver investors as the long term trends for bullion prices are a bit more secure. One can also look to gold and silver more confidently knowing the Chinese economy is counting on them as a part of its portfolio. It’s a good time to own gold and silver and a good time to get in now.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The gold & silver market appears as though it will be setting itself up to challenge its own all-time high yet again these upcoming weeks. The Commercial short and Large Spec have also rose in their positions over the past week. Some experts feel this is only a sign of a short-term reaction, but overall the COT structure proves to remain stable for the gold & silver market.

Not the same can be said for the fiat market. The fiat market is quickly taking a plunge in the marketplace and in comparison of currency cross rates, the British Pound is comparison to the U.S. dollar has been masking the defeat of the fiat market. Those that are in that market, however, are in a state of panic. The declining fiat market means standards of living or even the quality of life for those that base their retirement and welfare around that market are in a possible jeopardy.

In the past 10 years, gold has risen up against the U.S. dollar sevenfold. Since gold’s intrinsic value does not change, and it’s value simply rises or falls in nominal pricing against which ever currency it is being measured against, falling currencies like the fiat are on the road to destruction.

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Shannon King

Senior Staff Writer - GoldSilver.org

Sure the money grubbers on Wall Street have greedily taken advantage of the system, but they could do so only because the system let them. None of this debacle could have happened if the government had not perverted our monetary system.

To get us to where we are today the government had to scheme for decades to subvert the rules our Constitution so carefully carved in stone. The language was crystal clear and the intent left no ambiguity: America’s currency was to be gold and silver coins. Period.

It would take alchemy to do what fiat money has so easily done – bring the economy to its knees. Yet for some inexplicable reason the blame for our woes is cast everywhere but the Fed.

The Fed should not even exist. Whenever a government gets control over the money supply it is only a matter of time before they use it to seize ever greater power. They build their empires on wealth siphoned off the people by the most insidious tax ever conceived – inflation.

It all appears benign at first as easy money and easy credit give the appearance of growing wealth for all. By the time reality sets in the people have pawned their liberties and are left powerless to stop the juggernaut.

Or so they would have you believe. In truth all we have to do is pick up our ball and refuse to play anymore.

That won’t stop the government from running the dollar into the ground, but it won’t matter much to those who hold real money. Only wealth held in fiat money will be destroyed, wealth that never really existed in the first place.

The gold and silver markets hint that the move back to hard money is underway. All we individuals have to do to join in is invest in gold and silver.

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Shannon King

Senior Staff Writer - GoldSilver.org

On Tuesday, the Europeans delivered the feather on the camel’s back which incited the gold and silver prices to jump $50 and $1.50, respectively. The strife within the European continent is at its worst with no defense in sight. Despite the apparent methodic default by the Greeks, the Germans don’t want any part in it and are struggling to sway the other way en route beside Russia and China with Persian reinforcement.

The West is no longer appealing. Gold and silver bullion will profit dearly from a bulky European bank rescue. How much exactly? About $2 trillion! However much they dislike Geithner’s notion of substantial leverage, they can only accomplish such an endowment with monumental leverage. What is bound to occur is a ripple effect of bank debacles with New York and London experiencing their share.

Benefit: Maybe then governments and politicians alike will once and for all confront their current truths of entire defeat because of the disintegration within the banking structure. Gold and silver will surely be fruitful.

September could be considered a bad dream for those who turned their backs on the true safe havens…but there still might be a chance to wake up from that horrendous nightmare. The dawn of a new era is about to begin…with gold and silver bullion shining bright.

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Shannon King

Senior Staff Writer - GoldSilver.org

We can expect the two metals to react similarly, but lately the two seem a bit too tightly linked. After all, silver should be more sensitive to supply and demand pressures that are decidedly shorter on the supply side. Yet when gold dips, so does silver.

The answer may lie in the nature of today’s silver market. By a wide margin most of the action is in paper silver, and speculators exert considerable control over current prices. Short-term speculation is far more influenced by perception than reality and is also much more susceptible to manipulation.

The fundamentals dictate a much higher price for silver. The recent “correction” has been played to the hilt by those whose agenda are threatened by silver investment, fueling the fears of retail investors and steering them away from what is in fact a very promising investment.

Industrial demand for silver has not fallen, but continues to rise as already constricted supplies continue to diminish. Thus silver is not nearly as sensitive to economic conditions as all of the current propaganda would have you believe. And as fiat monies weaken pressure will mount to monetize silver as well as gold.

Both gold and silver have exceptional prospects because they are assets that don’t require ever greater consumption or debt to grow in value. As such they are insulated from the decline of fiat money and represent a true store of wealth.

As long as people think of wealth in terms of currency, however, we will continue to see anomalies in gold and silver prices that appear to defy all logic. But you can buck the fundamentals for just so long.

I believe silver will be the first to break free of the restraining forces because the misconceptions holding it down just don’t stand up to rational scrutiny. Gold may take a bit longer, but the desperate need for a secure store of wealth is an irresistible force.

Both gold and silver prices are headed for unimaginable heights over the next few years and those who pass up today’s opportunities will surely regret it.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Just three days ago the networks were all bubbly with the news that Europe was saved and our own GDP was signaling the end to the threat of another recession. How you can have another while still in the first is beside the point.

But wait. Today investors have already backed off to reconsider. Of course a little more thought beforehand would have been prudent considering that EU “agreement” was the 14th such in under two years, none of which has led to one iota of improvement. This one, however, is a real corker.

It doesn’t take much thought to see behind this curtain. Accord was reached in the eleventh hour not through scholarly discourse but through strong-arm coercion. European nations were told to take a bath on Greek debt to the tune of half of everything they hold or the mob would drive Greece into default and they’d lose it all. Some choice.

Greece was save from default by what can be described only as default. But because “voluntary” acceptance of a 50% write-off constitutes a settlement between the parties, it technically cannot be called a default. Everybody is happy, except for the investors holding that Greek paper whose investment got cut in half overnight and who cannot claim against their default insurance. But what’s new?

Fitch Ratings isn’t buying it, and the others are sure to follow. The service says the debt exchange clearly constitutes default and it will act accordingly to lower Greece’s rating. Fitch also noted that the agreement did nothing to diminish the risk of future downgrades for other European nations.

China isn’t getting onboard either, dashing the hopes of many that China was about to step in with gobs of desperately needed cash. To the contrary, Chinese Vice Finance Minister Zhu Guangyao announced that China “must wait until [the plan’s] structure is extremely clear. And moreover, this investment must be decided on after serious, technical discussions.”

It would seem that the gold and silver markets have been wide awake and paying rapt attention all along.

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Shannon King

Senior Staff Writer - GoldSilver.org

The present economic outlook is comprised of predicament, inconsistency, and ambiguity and has also highlighted the significance of investment competence and presumption in making sound choices with the end of obtaining profitable results. Gold and Silver holdings have been included 24% more by investors over the last decade as opposed to hedge funds (86%) and private equity (145%).

Institutional investors have embraced gold at an even lesser percentage only having included it as an undersized factor within a more extensive commodity index. In addition, investors who prefer to approach gold through a commodities index are not only under-allocated but they do not profit from the risk management compensations gold can put forward.

• A good example of this is an investor who has a portfolio with approximately 5% distributed to a benchmark commodity index like the S & P Goldman Sachs Commodity Index; the productive exposure to gold can be as low as 0.1% and merely as high as 0.4%.

When a country’s economic system is running well, numerous alternative assets magnify diversification and increment value to a portfolio. Nevertheless, under every economic situation this may not be valid.

On the other hand, gold and silver’s unique features are noteworthy. There are numerous studies which validate the exclusive characteristics that make gold and silver an efficient foundation asset which boosts portfolio performance, while curtailing losses in times of economic disorder.

Beyond doubt, it is a global asset that is subject to economic growth of rising economies, the goings-on of central banks as they administer foreign reserves, relevance in new technologies, and the solidity of financial markets.

This is the rationale behind investing in gold and silver as a wise method for portfolio diversity and profitability.

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Shannon King

Senior Staff Writer - GoldSilver.org

Such seemingly inexplicable behavior is a symptom of the disease permeating the markets today, just another case of synapses gone wild. It is not hard to understand why the markets can’t get their feet on the ground.

A healthy market has no difficulty fixing prices. Participants share a common reference to value and they can easily reach accord. When governments try to create wealth in the markets, however, they cloud that reference. And a debt-fueled economy obscures it beyond recognition.

Money, whether gold or silver or currency, can do but one thing and that is store wealth. Money cannot by itself create wealth. That can happen only through the exchange of money for something tangible.

The vast majority of wealth today is a fiction created by fiat money. The frantic efforts of central banks to revive debt-saturated economies by creating new money defines insanity. The glut of fiat money is fast approaching 10 times real global wealth, and governments everywhere are primed to print even more.

With true wealth removed from the equation it is not surprising that the markets can’t come to terms. Nobody really knows what anything is worth because nobody can fix a value on the medium of exchange. Money has to be directly linked to global wealth to have any meaning at all.

The fictional wealth of fiat money is doomed to be erased, but wealth stored in real money will survive. Throughout history gold and silver investments have proven that they are not luxuries but absolute necessities for the preservation of wealth.

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Shannon King

Senior Staff Writer - GoldSilver.org

Americans have become strongly aware that the Fed is largely responsible for the dismal shape of our economy. According to a survey by Rasmussen Reports last week, nearly two thirds of mainstream voters want to greatly reduce “economic control by central bankers and political leaders” and nearly three quarters “of all voters believe government and big business work together against the interests of consumers and investors.”

The average American may lack the highfalutin economic degrees of Bernanke and his pals, but 65% of them “trust their own economic judgment more than President Obama’s.” That says a lot.

Although the idea that we are at the end of life for today’s fiat monies is far from being widely accepted, people are once again putting good old American common sense to work. They don’t need complicated charts and graphs to know that the Fed’s policies are killing their future prospects while lining the pockets of the elite.

Americans are talking more, listening harder, and putting things together in their minds. They are on the verge of a collective epiphany and growing discussion of a return to the gold standard will provide the trigger.

Over the next year we can expect such discussion to move to the forefront of political debate. When it does the vital link between fiat money and the collapse of our economy will be forged. And people will discover the means to end the debilitating collusion between our government and big business.

As average Americans come to understand that our economic problems are the direct result of the corruption of the markets and not the markets themselves they will rally to the cause of the free market and sound money

The gold and silver markets are sitting at idle, waiting for American investors to kick them into gear.

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Shannon King

Senior Staff Writer - GoldSilver.org

The New York Times calls this state of resignation a “confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow.” There certainly is sufficient cause for gloom – “incomes have declined, many people cannot find jobs, few trust the government to make things better” – but is it sufficient cause for despair? Bernanke & Co. don’t think it is.

In search of answers a revelation is striking “a growing number of economists” making them reassess the crisis. Brace yourself: “the collapse of housing prices … is also a critical and underappreciated impediment to recovery.” Surprise! “Americans have lost a vast amount of wealth … They lack money, and they lack the confidence that they will have more money tomorrow.”

Incredibly, those who are running our dog and pony economic show are just now figuring that out. That alone should send individuals running full tilt to the security of gold and silver investment.

What goes through the minds of those in ivory towers when they read that 46 million people now rely on food stamps or that 100 million Americans haven’t seen an increase in their purchasing power in 40 years.

The economic decision makers’ disconnect is so complete that they either cannot see that the average American is getting poorer every year or they simply cannot comprehend why it should matter to them. The way things are going they are going to have to learn the hard way.

Last Friday’s Reuter’s report shows that expectations for an improved economy have fallen to the lowest level in over 30 years. Reality appears to be sinking in. Social discord is on the rise. Still, the protests have yet to be respected for what they are: the first emergence of tumultuous undercurrents that have been building for decades.

The real luxuries that we can ill afford today are complacency and self-pity. Taking action under adversity is cathartic. And buying gold and silver, knowing that you have secured your wealth, will brighten any day.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Ron Paul has made no bones about his distaste for the Fed and fiat money and in his “Plan to Restore America” he pledges a full audit of the central bank. While his goal is to “end the Fed,” he understands that will be problematic, so the plan calls for competing currency legislation to get the ball rolling.

Sadly, I do not believe America is quite ready yet to swallow Dr. Paul’s bitter – but absolutely necessary – pill. Sentiment is building in that direction, however, and people are awakening to the true value of gold and silver.

Signs are popping up at businesses here and there across the land offering greatly reduced prices for payment in pre-1964 coins. And do not underestimate the significance of recent protests.

Peaceful protests can, and often do, turn to riots. Look almost anywhere in the world today for proof. And when protests go viral, revolution cannot be far behind. It doesn’t take armed conflict to bring about great societal change, just a whole lot of people who have had enough of the status quo.

That’s why Occupy Wall Street is so important. Its significance is not in getting across specific grievances but in demonstrating that people are mad as hell and aren’t going to take it any more. The country is not all that far from seeing a cease fire among its citizens as they join forces against a common enemy – the state.

Ron Paul is sure to face considerable derision for his plan, but the truth in it will win out. He has dared to say what must be said and it is now up to us to see the wisdom in it. The changes Dr. Paul calls for are essential and eventually must take place, either through sensible politics or revolution.

Either way the greenback will fall by the wayside to be replaced by gold and silver coins.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

It was a relatively easy adjustment for gold, but silver has experienced the pullout of big money. Until that rather large hole gets filled it will be hard to get things moving again without some major shock to Wall Street. But that could happen any day.

“Big Trouble Brewing For The Global Economy,” reads the headline of an article by Chris Martenson Seeking Alpha. In it Martenson predicts “that a market crash is on the way. In fact, … the entire future from here onward will be marked by sharp plunges (both crashes and regular market declines), followed by periods of stability, if not apparent recovery.”

The danger is in those periods of stability, in which investors get tempted to go back into equities. If gold and silver prices have fallen or simply remained level, the temptation will be even greater. But the “apparent recovery” is apt to end precipitously, wiping out vast amounts of wealth.

Presidential economic advisor Robert Shapiro, now with the IMF, has warned that if the EU does not deal with the sovereign debt crisis that in a matter of weeks “we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system” and take down some of the largest banks in the world.

And that’s just one of many time bombs ticking away around the world. When the first one blows up it will it will set off another, which will set of the next, and then the next … When it happens – and surely it will happen – we will have little if any warning.

Savvy investors won’t wait to see what will happen. They will head for the shelter of gold and silver investments while they still have time.

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Shannon King

Senior Staff Writer - GoldSilver.org

Gold has since rebounded nicely, but not so silver. Considering that the money supply has inflated 700% since then one would expect the price of silver to be at the very least close to $200 today. The gap is far too wide to sustain.

ArabianMoney.net makes a very strong case for an imminent snap back in silver prices. Adding to the pressure to catch up is a startling shortage in supply. Saudi shops began running out of silver a month ago and now the UAE is likewise sold out.

It’s not just an Arab phenomenon. From Texas to Australia reports are coming in of little to no stocks. “Something has to give and it is the price of physical silver rather than the Comex price of the shiniest of metals,” ArabianMoney says.

Think of it as a bubble in reverse. No amount of government meddling can hold back a market under such mounting pressure. The rebound, when it comes, will be enormous. “Those who go seeking out physical silver to buy at current prices are going to be very well rewarded and soon.”

A lot has changed over the past three decades. The central banks were successful in manipulating gold and silver prices only because they had a relatively strong currency to work with. But those days are over.

We see it today in the gold price, which steadfastly rebukes all efforts to hold it back. And we will see silver break out in the very near future.

There couldn’t be a better time than now to get serious about gold and silver investment.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Although I’m not ready to declare that the game is afoot once more, I believe that these are strong signals that the markets have regrouped after shaking off the quick buck fever and are beginning to move forward with a more solid base of long-term safe haven investments. But that doesn’t preclude further panic shocks.

There may well be a few more rounds of exceptional buying opportunity as the prices reach the point where those of little faith will take their money and run. The fundamentals are catching up, however, and I doubt we will see any more extended periods of bargain basement prices for quite some time.

Tepid gains in hiring and feeble attempts to bolster optimism just don’t work any more. Too much is going badly in too many places. Throughout the developed economies central banks are shoveling cash into the boilers trying to build up a head of steam, but there is no hope of ever making the grade.

There is only one solution: let the engine roll back down the mountain into the station and load up on real fuel. Instead, they just shovel ever more furiously and they’ll keep on doing it until all of the cash is gone. From time to time they will manage to eke out a little forward progress, but it will no longer be greeted by the cheers of all aboard. They know that they are going nowhere.

Meanwhile an engine fueled by gold and silver sits on a siding, waiting to surge up over the mountain the moment the oversized train that can’t finally coasts silently by.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The need for international monetary reform is urgent, but it is also highly unlikely. The memory of Nixon single-handedly pulling the rug out from under the last great experiment is still too fresh on peoples’ minds. But while western central banks struggle to keep the charade alive, our wealth is being systematically siphoned off to the oil producers and emerging economies.

China in particular is making its move to unseat the dollar. The Pan Asia Gold Exchange, which opens next year, will trade only in physical gold and the medium of exchange will be the renminbi. Closely tying their currency to gold in that manner will give the Chinese an advantage no developed country can match.

The markets have had a rude awakening to the fact that a major restructuring is just over the horizon. The immediate effect has been a self-made liquidity crisis that has left investors holding nothing but cash. The second phase, when they are struck with the realization that the value of all that cash is rapidly evaporating, will not be a long time coming.

When that happens, personal prejudices against gold and silver will be swept aside. We are very close to the point when even a minor shock can potentially set off an unstoppable chain reaction. And there will be little, if any, warning when it does. Gold and silver offer the only shelter, and only to those who have the wisdom to seek it before disaster strikes.

Perhaps the world can somehow still avert a major economic catastrophe. I hope it can. But the threat is very real and the potential harm so extreme that it would be foolish not to take the precautionary measure of securing wealth with gold and silver.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Greece? Never been. Hear it’s killer. Timely off-color humor aside, think of it this way. Huge European institutions like Societe Generale, UniCredit and Dexia are so swamped with bad Greek debt it threatens to sink the ship. Greece has already signaled the measures taken so far to keep the country out of bankruptcy aren’t enough and possible creditors in the EU are facing extreme political adversity in their home countries. It’s not good politics to bolster Greece. Something about the overly tanned, sunglass-eyed Grecian sitting on the beach doesn’t sit well with German manufacturers.

If, and the keyword is if, anything were to happen in Greece such as a major default those banks that are attached to it through their balance sheets will pay through the nose. A major failure in the area could trigger the debasement of the Euro as a currency and the European Union as a political base. Get it?

The shade of a possibility of this is causing banks all over the world to rein in the lines of credit to cover their potential losses, hedge their bets, and otherwise deal with the European problem. Remember that whole credit crunch thing? Money is thus getting sucked right out of the market, and importantly the futures market, which has partially caused the drop in gold and silver prices recently.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

If you’re one of the many, many Americans who have gone to work one day just to find that the shenanigans on Wall Street are draining your 401(k) like draining the blood right out of your body, consider gold and silver. Gold and silver investments are the best way to take that money back from bad bankers and ensure that you get to keep it and it keeps its value for a long, long time.

Gold and silver prices are right for entrance into the market or for expanding your portfolio right now because we’ve just experienced what’s known as a correction, or period of adjustment from an artificially high price to a slightly lower than real market value price. That means there is much less risk of movement on the downside and much more room for growth on the upside. It’s a good time to take advantage of the natural movement for some of the best prices in gold and silver coins that we’ve seen in months.

John Brynjolfsson, former PIMCO fund manager, has recently stated that because the European Central Bank is so exposed to the Greek crisis, the ideal way to both preserve your assets and play the crisis is buying gold. Trust the ECB to play it right? Sure, and while you’re at it, you might as well take Ben Bernanke’s testimony as God’s honest truth. Unless, of course, he won’t tell you what he did with the money.

You could put your hope in the bankers on Wall Street, with their bailouts and bad debts, or you could take control of your money by taking advantage of the prices of gold and silver. Why let a bleeder on Wall Street slowly rob you of your life? Find out how to buy gold and silver and take the reigns. It’s your life. Invest it right.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

So far, Greece has been receiving the most help from Germany, but it is unclear whether Germany will be able or be willing to provide further assistance. The Chancellor of Germany, Angela Merkel, has been losing ground in regional elections because of her controversial and politically unfavorable support of the bailout package. The austerity imposed on the German people to bolster the Mediterranean nation is extremely unpopular among the German voters and the actions already forced through have created extreme resentment.

The effect of this situation on the world stock markets was quite negative. US stocks were down over 1% during intraday trading, China’s Hang Seng was down 4.4% overnight, and the FTSE was down 1.9%. The Euro sank to an 8½ month low against the dollar in the FOREX currency exchange.

Gold showed a sturdy gain, however, up over $30 in intraday trading. This is a reflection of sensible investors seeking the most stable haven during the Greek crisis. Following last week’s loss in stocks and today’s news out of Greece, investors are moving towards the certainty and predictability of the gold market as a logical way to shelter assets during the storm. This movement is expected to continue as the Greek situation progresses.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

And, not only that, it’s on the rise even further. Considering that gold might be taking a break, silver is in a position to skyrocket for quite a few considerations.

1. Two groups, industry and investor demand, might both desire to increase their silver assets, however with diverse intentions. While the boost in hiring and additional evidence of economic recovery we’ve seen could prompt higher demand from industry, investors possibly will want additional silver because they’re not yet swayed the upturn is concrete and further desire more security for their money.
2. Countries with emerging economies need silver. Whereas the United States and other Western economies have been under pressure, China, India, and others have been growing larger extremely quickly and their industries also require silver. Likewise, the amount of investors in emerging countries is getting higher as those areas become wealthier, and a lot of those investors appreciate precious metals like silver as much as we do because of its attractive investing qualities.
3. We are all feeling inflation with food and gas prices, yet consequential inflation hasn’t been attained up till now but it is coming. The government has been printing billions of dollars to try and pay its massive debt, fabricating further new money in the past couple of years than at any other time in the history of the United States. This will only produce higher inflation and a continuous drop in the dollar’s monetary worth.

The economy is at a defining moment at the present time:

• manifestations of revitalization are present
• however, circumstances are perfect for inflation as well

At this position, silver may be a more profitable investment than gold for the reason that there are two fundamental parts of demand:

• investors
• industry

But then gold is much more at the caprice of investors and is more apt to fail or succeed because of their need to feel safe. If the economy soars out of control and investors start to feel optimistic about stocks, gold could rapidly turn into yesterday’s bubble.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

• Gold-June 2001, $10,000 investment NOW-$50,000
• Silver-June 2001, $10,000 investment NOW…a whopping $80,000

If we contemplate this $30,000 difference, we can easily see how it could be considered the new precious metal. There is proof that it could rapidly substitute gold as the metal of preference for investors. Some analysts have even gone as far to predict silver prices as high as $90 an ounce by the end of 2011 which would signify it would have doubled from its existing price.

On the other hand, gold may take a break and float around $1,500 an ounce during the year, implying there won’t be much, if any, money to be made for now.

The resplendent silver metal has soared for many of the same reasons as gold:

• The most important being prevalent panic about the state and course of the weakening economy.

With economic quandary in the air and a menace of higher inflation, as there is at the present moment, precious metals turn ever more popular because of their seeming security and standing as tough inflation hedges.

Silver’s great benefit is not parallel to gold’s, which is acting as a store of value. Instead, silver, in addition to proving an inflation hedge and serving to cool investors, has many purposes in industry, medicine, and dentistry on account of its electrical and thermal conductivity, utility in making metal alloys, as well as other exclusive properties. The percentage of annual silver demand from commercial and industrial applications is about 60%.

Something else to ponder.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Suppose you want to put some cash away for a rainy day. Your bank will pay you a fraction of one percent interest to put it there, and you could do a little better than that with a CD. But a year later you would find that the money in your account would buy less than it would have the day you put it in.

Now suppose instead you exchange your dollars for real money and tucked it in a safe deposit box. Sure you would have to pay the bank to hold it for you and not the other way around, but all that matters is how much your savings would be worth today.

In just the last six months gold has gained 26% and silver 14%, despite the recent ups and downs. And those figures climb to 41% and 92% respectively over the past year. Very impressive, but perhaps a more meaningful way to look at it would be to see what the prices would have to be next spring in order to realize a more conservative return.

Nobody would argue that a 10% return on savings these days would be extraordinary. To realize that gold would have to stay above $1,560 per ounce and silver $36.60. From where I stand that’s a pretty safe bet no matter what happens. Even if gold dropped to $1,700 and stayed flat for a full six months it would represent a 20% yearly return.

But are those really earnings? Perhaps not, in terms of purchasing power. That is what gold and silver are meant to preserve, not create. Relative to cash, however, there is no contest. One thousand dollars deposited in a bank a year ago at a generous 2.5% interest, would have grown to $1,025. The same amount invested in gold and cashed it in today would leave you with over $1,400 in green backs. And with silver you would now have more than $1,900.

Of course converting gold and silver to cash defeats their purpose – after all who needs more of a rapidly deteriorating asset anyway? The point is that gold and silver investments have enormous headroom and it would take unimaginable setbacks to seriously reduce their long-term returns.

That isn’t about to happen any time soon.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

It is in their nature – especially silver’s – to readjust their trajectory when the market starts to overheat, and that’s what makes them a sound investment. Whenever there is a flurry of activity prices are bound to move away from the trends – downward when the sentiment is to sell and upwards when it is to buy. Either way the activity soon dies down as the market clears and enters a period of consolidation.

Buyers who move in after a selloff won’t become sellers until their reservation price – the minimum amount it would take to convince them to sell – is met, so the price will quickly resume its upward trend. The net effect of a selloff consolidation is that it tends to cleanse the market of timid and quick-buck investors, putting the market on even better footing than it had before the selloff.

The current consolidation is a natural reaction to unrealistically escalating prices driven by speculators and poorly informed investors. When prices deviate considerably above the trend they surpass the reservation sell price of a large number of investors, flooding the market with new sellers. Prices will fall to some point where there are no more investors willing to sell at the highest offered price.

The ease of entry into the silver market makes it more accessible to speculators, especially the amateurs, and therefore is more susceptible to disproportionate bouts of buying and selling. But just as it is with gold, its the strong underlying fundamentals that ultimately determine the true value.

Wise gold and silver investing looks only to long-term growth. Successful investors set a reasonable reservation price to buy and they do so at every opportunity. And while they aren’t intending to become sellers, they set a failsafe reservation price to sell in case the market should accelerate out of control.

Other than that their reaction to consolidation cycles is that of Alfred E. Newman: “What, me worry?”

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Unfortunately for carriers, adding to the fear of chaotic world economy is that it would affect them concurrently with a critical time of year.

More than actual travel volume worries are the uneasy projections that are quite sluggish:

• The average second quarter financial outcomes have weakened by 60 percent (International Air Transport Association)

Furthermore, fuel costs are up 50 percent from last year.

Distributions of new aircrafts have been marked up which, in turn, obligates airlines to have more than enough passengers. This is simultaneous with the financial despair that is occurring.

It is during travel season, which is the third quarter, when airlines produce the greatest number of profits; nevertheless, there is the worsening market situation to ponder.

Breakdown of quarters:

• First quarter: deficit
• Second quarter: profits (80 percent of profits together with third quarter numbers)
• Third quarter: profits
• Fourth quarter: feeble

The IATA determined that airlines grossed $1.8 billion in the second quarter, however, lower by 60 percent from the previous year.

Key U.S. airline stocks dropped more than 2 percent in early trading.

• The world's largest airline company, United Continental Holdings Inc., slid 70 cents, or 3.9 percent, to $17.37.
• Stocks of Delta Air Lines Inc. fell 19 cents, or 2.6 percent, to $7.08.
• The Dow Jones Industrials Average lost nearly 300 points in early trading.

The Dow Jones industrial average decreased by more than 250 points. The trouble came after abrupt declines in European indexes last Monday regarding anxieties that Europe's debt problems could slow growth throughout the world.

Adding to the uncertainties, a statement last Tuesday on the U.S. service sector will most probably demonstrate the fourth straight month of dwindling growth.

It shadows a jobs report Friday that no jobs were supplemented to the economy in August.

Since September 2010 there hasn’t been such a poor reading on the jobs market.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

• New York: Benchmark West Texas Intermediate crude lost $2.01 to $84.44 per barrel

Economic turmoil in the United States is attempting to thrive while investors are hesitant with news that the economy was unsuccessful in producing jobs in August.

The debt chaos in Europe has elevated reservations about their economic restoration as well.

Peter Beutel, a Cameron Hanover analyst, alleges that reliance on the two nations is not great. Everyone is sitting tight until President Obama along with the Federal Reserve enlightens us how they plan to fuel the economy and generate employment.

He also stated that “it will take something major from the White House or from the Fed to turn this around.” Unemployment is suspended at 9.1 percent.

A few months ago, economists projected that a recovering world economy would be the impetus for world oil demand to reach maximum levels for this year. They are no longer supporting this assertion.

Developing nations, including China are, nevertheless, going to push oil demand. However, they will not develop as quickly if consumers in the United States and Europe decrease purchases of clothing, toys, electronics and other merchandise that are made in foreign industries.

Jim Ritterbusch, an independent analyst, declared that demand of oil within the United States as well as throughout the world will not reach maximum outlooks during the second half of this year.

Concurrently, retail gasoline was flat overnight at a national average of $3.66 per gallon.

• A gallon of regular unleaded is 97.7 cents greater than it was in 2010.

In further trading:

• heating oil fell 1.45 cents to $2.9829 per gallon and
• gasoline futures tumbled 4.85 cents to $2.7911 per gallon
• natural gas was essentially flat at $3.868 per 1,000 cubic feet

Utilized to price many international oil varieties, Brent crude in London, increased $1.67 to $111.75 per barrel.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Many have yet to be convinced of the need for shelter; they believe this crisis is not so different from those they have weathered in the past. A few hints from the Fed is all they need to rush right back into stocks. But it’s complacency that gets people killed when monster storms strike.

“Even nuts and bolts chart reading is serving up bad news,” says Michael Kahn of MarketWatch, pointing out that the trend line supporting stock’s bull market “has been soundly broken to the downside. So has solid support in existence most of 2011 on the Standard & Poor’s 500, the Nasdaq and the small capitalization Russell 200 index.” To him the signs are clear that “a cyclical bear market has begun.”

The Wall Street Journal’s Matt Phillips and Jonathan Cheng underscore the immediate danger, noting that following the “ugliest August in a decade … stocks are off to the worst start to September since 1974.” And for decades September is the only month that has consistently ended up in the red.

But what about those huge corporate profits? Well, they can’t keep making money if folks don’t spend it, and Friday’s report revealed the average wage shrank 0.1% last month. With no jobs added, that’s a giant step backwards.

Cracks are beginning to show in what had been a curiously strong levee holding back consumer frugality. Already third quarter predictions are showing a significant drop in the S&P 500 earnings and they are expected to continue falling next year as revenue growth declines.

Urs Gmuer, a leading Swiss asset manager, recently told CNBC that declining demand for debt capital assets has opened the gate for gold to enter a super-cycle, a bull market that “will end all the other major bull markets.” And silver is set to outshine gold.

The current gold/silver ratio of 45:1, Gmuer says, doesn’t come close to reflecting the decline in silver production over the past six decades, which today is only ten times that of gold. That is a very strong indication that a market correction is long overdue, and narrowing the gap by just one half would take the silver price up into the $100 range.

Now that currencies have been debunked as safe harbor, stocks are set to get flushed down the john, debt capital is falling out of favor, and gold and silver prices are chomping on the bit – isn’t it time to get over the phobia and head for the time-tested shelter of gold and silver investments?

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

But the comes as no surprise – or at least it shouldn’t – so what makes today so special? Maybe it’s just that denial is breaking down. But even at that, the Wall Street Journal is soft-pedaling its report. Stocks are down, they say, because of fears that we are “heading for a recession.” Then they buffered the downside when “stocks pared some early losses.” But the overwhelming sentiment among Americans is that we never got out of the last recession, and about half of us feel we are heading into a great depression. They all have it wrong.

For some time now the Daily Reckoning has been beating the drum, trying to wake us all up to the fact that we are in a “Great Correction.” We built our economy on false premises and inflated it to the bursting point leveraging credit. You just can’t fix that, and trying can make matters only worse.

Corrections are simply the fundamentals putting things right. The best thing we can do in a correction is back off and let Mr. Market do his job. He’s going to do it anyway with or without our blessing, and our interference serves only to put him in a very ugly mood.

Thinking in terms of an approaching second dip is extremely dangerous. It carries with it the notion that things can still be patched up. And who do you call to fix it? Bernanke and the Fed, the Keystone Kops of fiscal control.

So while gold and silver may put in a fairly decent day today, and the stock market may get bruised, we are not even close to where we should be. Big money isn’t about to back out gracefully, not while there’s even a smidgeon of blood yet to be drawn. Once again (and again and again) the Fed will submit to peer pressure and concoct some scheme that flies in the face of reason. And our quality of life will keep deteriorating.

Unless our government gets serious about turning down the heat the pressure will continue to build. And someday it will have to blow. That’s not a pretty thought, but it is real. Fortunately, for those with the vision to see it, that dark cloud will have a gold and silver lining.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

For one thing, big corporate money has been busy. That alone can’t hold things up, but the sweet scent of free money sure can. Bernanke has painted himself into a corner and the pressure is on for the Fed to do something. His feeble attempt to kick the can into Congress apparently fell on deaf ears, but not his hints of future quantitative easing.

According to the OMC’s August minutes some Fed members “expressed the view that additional accommodation was warranted because they expected the unemployment rate to remain well above, and inflation to be at or below, levels consistent with the Committee’s mandate,” and some even “felt that recent economic developments justified a more substantial move at this meeting.” Scarier still, most members still suffer the delusion that the committee “could contribute importantly to better outcomes.”

The biggest problem facing the committee is not whether to have a go at QE3 – after all, QE2 was such a smashing success – but how to shove it down our throats without us choking on it. That should not prove to be that daunting a task because they have had a lot of practice disguising their previous antics hashed out behind closed doors.

One popular idea floating around is not to buy up more paper outright but swap out what they already have for paper maturing further down the road. No money gets “spent” so nobody complains. But in fact they will have monetized more debt, pushing the real problem a short ways into the future when it will reappear as an even more devastating threat.

For a while the speculators had a good thing going, buying gold and silver here on the cheap and cashing in quickly on the global exchanges. But now that the fundamentals are taking back control we can expect the speculators to start backing out of the market.

As the recent volatility dies down, the more timid investors will start to rally around gold and silver and get prices back on track.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Both the precious metals are in a speculators’ market because widespread investor interest has yet to materialize. Instead we are seeing historic levels in the M1 money supply – people are hoarding the most dangerous asset of all, greenbacks.

If the equities market were healthy all those corporate profits would translate to higher prices, but corporations too are stashing the cash in record levels. Money is sitting around everywhere doing nothing but losing value. That’s a sad commentary on the state of our economy.

It is only thanks to the government’s misguided belief that recovery begins on Wall Street and not Main Street that the equities market has not completely tanked. But by focusing all of its rescue efforts on a handful of fat cats the government has dug itself into a hole from which it cannot extricate itself.

With the fiscal year winding down the government has one last chance to show the world that it is more than a bunch of self-seeking fiscally irresponsible adolescents. Congress could roll up its sleeves and put together a budget before the deadline, proving once and for all that it places the good of the country above personal ambition. And Chairman Bernanke could come forth, admit defeat, and recommend that the Fed be dissolved in favor of something new that is restricted to the central bank’s original charter.

None of that, of course, has the slightest chance of happening. Bernanke is backed into a corner and sooner or later will have to do something. The two-day September meeting is shaping up to be the perfect venue to announce the next harebrained scheme.

Market volatility can’t last forever. It’s a very short step from hoarding cash to buying gold and silver, and it won’t take much more to convince millions of Americans to take that step.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Since it would be impossible to believe that equities traders are elated over all the things Bernanke didn’t say, it is safe to assume they are reading something between the lines. What that could be escapes me.

The chairman so much as said he has to mull things over a while longer and he warned us that any long-term changes must come from Congress. Bernanke also tried to reassure the world that “the growth fundamentals of the United States do not appear to have been permanently altered,” and that while recovery has been “modest,” he and the boys have inflation well under control. If anybody buys that I have a bridge for sale.

Maybe that’s the point. Wall Street is happy because they believe we normal folk have been successfully buffaloed one more time. I wouldn’t count on it.

I don’t know how anybody could read this in the NY Times and not flinch: “The renewed willingness and confidence to spend money we don’t have is vital to the continuing recovery.” We’re all still pretty busy trying to deleverage credit and build up some real wealth for ourselves. Yet that is still the basis for all of the Fed’s policies.

What Bernanke steadfastly refuses to acknowledge is the US can no longer act in isolation to the rest of the world. Money moves about too fast these days, and consuming more than one produces is a surefire way to make it move elsewhere.

Whatever tools that remain in the Fed’s bag of tricks won’t work any better than what they have already tried. By now they should have learned that you can’t micromanage an economy and they should admit defeat. Its time to shut down the Fed and let the markets take over.

That’s what the markets have been trying to do all along but the Fed keeps mucking things up. Now that the Fed has bowed out for a couple of weeks you would expect them to make their move.

But the volatility in gold and silver prices might be a sign that investors are so used to Uncle Ben leading them by the hand that they have forgotten how things really work.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

If you look closely at the charts one thing becomes abundantly clear – it’s only the American exchange that’s tumbling. Traders here are betting that global prices are set to hit the skids. But why? Does anyone in their right mind truly believe that happy days will soon be here again?

That possibility is so remote as not to exist at all, at least for most of us poor schmucks. But then, very few everyday Americans believe that what they think counts any more. My guess is that the fat cats are convinced that Bernanke Claus has hitched up his team once again and will soon be stuffing their stockings with gobs of free cash. After all, they are in the market for the quick kill, not long term survival.

So let them drive down the price of gold and silver. We have seen where those are heading and it is extremely likely that whatever the Fed tries to pull will be so transparent that it won’t fool anybody. The mass media has had a major change of heart about how it reports the economy and all of that cannot be undone.

None-the-less, a hundred point reversal in the gold price is not unexpected. And neither is it anything to worry about. The trajectory is unquestionable, but today’s prices are bound to intimidate the timid. It will take some time for a lot of folks to get comfortable with the fact that a sea change is under way in the global monetary system, and until they finally accept the inevitable gold and silver prices are likely to be exceptionally volatile.

Unlike futures speculators, however, safe haven investors are hunkering down for the long haul while the world tries to sort through the mess left in the wake of failing western fiat money. For the time being it is impossible to fix a ceiling on either the gold or silver price, but it is safe to say that we aren’t even close to it yet. Whatever the current price may be, it will be higher not far down the road.

So the choice is yours. You can side with the gamblers down at NYMEX and bet the ranch that all this doom and gloom is just rabid paranoia. Or you can choose to see what the rest of the world sees and do what the rest of the world is doing – buy all the gold and silver you can while the ante is low.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

None-the-less, hope springs eternal, and this week it hinges on the appearance of the imperial wizard in Jackson Hole. But Bernanke’s wand has no more sparkle. There is nothing he can do to fool us all into making risky investments. Americans can be painfully slow learners at times, but we are even slower forgetters.

However, the expected backlash against gold and silver prices – the old bubble scare tactics in particular – are having their effect on many Americans. Rather than investing in gold and silver they have been persuaded to cash in everything they own containing the precious metals while the price is at its peak. Big mistake.

The gold in that jewelry and the silver in that flatware are your wealth. The dollars you get in exchange will soon be your toilet paper. That’s a pretty poor trade.

But aren’t gold and silver prices topping off? Perhaps – if tomorrow our debt mystically disappears bringing about a total reversal in the economy. But I wouldn’t bet on that and apparently neither are the rapidly swelling numbers of investors seeking shelter in the metals.

In fact, we are seeing just the opening round of a fight that promises to go the distance. Before long global retirement funds will have to follow suit or face the consequences of losing their clients’ retirements. With nothing else even in the works to stabilize the global monetary system, there is no limit to how far gold and silver prices will rise.

The moral of the story is clear. Not only should you hang on to every bit of gold and silver you have, it’s a darned good idea to keep buying all the gold and silver you can.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Wouldn’t it be better to be greeted by a competent physician in the emergency room who is willing to tell it like it is? “Yes, you are in grave danger, and there are no guarantees. We will do everything in our power but there is no quick fix. And your survival will require you to do your part as well, to make some hard choices and change the way you are living.”

Then why is it any more acceptable for our government to be out campaigning while the economy crumbles? Somehow we have reached a state where hollow rhetoric means more to us than decisive action. Whenever a politician shows up at a rally the people should shout in unison, “Get back to work or find another job!” Instead we blissfully drink in the diatribe, grateful for being given something or someone to rail against, a scapegoat for our misery.

There can be no more cure in that than in returning from the hospital to a plate of donuts, a pack of smokes, and a bottle of Jack Daniels. Nothing short of a total change in lifestyle will do. And the first sacrifice we have to make is to abandon fiat money and the bloated institutions they have created – the central banks.

“Why stop spending?” asks Jordi Franch in the Mises Daily. “Why sacrifice immediate pleasures? The new fiat currency, devoid of intrinsic properties, releases governments from their commitment to convertibility, granting unlimited powers to the rulers of this statist system.” Let us revel in “a new era of enjoyment and excitement under the new gospel of spending.” Having broken “the link between production and consumption” we are free to believe “that the ineradicable scarcity of capital has been abolished.”

It was in that state of delusion that we failed to heed the urging of Tim Pawlenty to abolish the Fed so we could get to work on true recovery. When he withdrew from the race we lost that vital voice of reason, dooming ourselves to even greater misery just a short ways down the road.

While there is little hope for the country in the foreseeable future, we don’t have to go down with the ship. We don’t have to wait for Franch’s alternative, “a return to sound money, a restoration of the true currency, spontaneous creation of the social order, and a rejection of the meddling of governments and central banks.”

We can make that choice today with gold and silver investments.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

While gold has been relentless in its climb, silver lagged unreasonably far behind. The theory goes that the troubles in the equities market signal an imminent drop in industrial demand that overshadows any increase in safe haven investment. Even if there were any basis to the argument – and it is highly doubtful that any fundamental change in supply and demand has been triggered – the movement to safe haven is so great that any such effect would be transitory. And it sure looks like silver is making another run for the clouds.

Whenever reality intrudes on investors reverie, gold rises and silver will chase after it. Silver may not offer the same degree of shelter as gold, but it is far superior to any paper asset and it is well within reach of everyone with limited means. And in times like these, when demand for safe harbor grows exponentially, the value of silver can only strengthen.

There is undeniably panic on the Street, but it has nothing to do with S&P. For years there has been a growing awareness of how deep the trouble is that we are in, and that is only now coming to a head. Americans have lost virtually all faith in the government and consumer sentiment has plummeted to a 31 year low. The specter of losing everything in our retirement accounts once again looms over our heads while the prospects of having a safety net grow increasingly dim.

These are truly troubling and uncertain times, but that calls for action, not panic. Unfortunately there is little that can be done about the assets already held in most 401K accounts, so there is nothing to be gained by worrying about it. However, future contributions can be diverted to gold and silver invested in a self-directed gold IRA.

More important, however, we need to rethink our priorities. We need to weigh the merits of every discretionary purchase against those of investing to secure the future. That is no easy task for a society that is just beginning to wean itself from decades of government sponsored credit spending, but it is essential to preserving our wellbeing.

The satisfaction we get from buying material things is fleeting, but that which we get from securing our families’ futures with gold and silver investments is eternal.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

It is safe to say that the trigger to gold’s run was the S&P downgrade, but why now, and why hasn’t silver joined the party?

We can rule out widespread panic, because the low entry cost of silver makes it ideal for panic buying. We can probably also eliminate long-term safe haven investments, because there has also been a rush to Treasuries. And that is very revealing.

The infamous downgrade apparently has had very little impact on US debt being the safe haven vehicle of choice, but only because there is no broadly available paper alternative. Numerous countries issue far better notes, but the sum total of their economies can’t hold a candle to ours. They just can’t borrow enough fast enough to keep up with demand. But we sure can.

Still, there is something intuitively wrong with throwing your money at what is clearly a dying economy, no matter how big it is. All you get is a tiny sliver of a huge sour pie. And with the ability to cash in your IOUs getting called into question, it seems quite insane. What are they hoping for? To get a square foot of Disney World when we go chapter 11? Obviously the black hole of denial has spread far beyond our shores.

But let’s get back to gold. There have been no significant shocks to supply or demand and speculation has been rapidly declining as prices soar. The only plausible explanation that remains for today’s gold prices is that investors are seeing extreme uncertainty in the equities market. But why only for the short term? Have they gone so completely mad that they believe the spasms running throughout the global stock exchanges are only a transitory panic reaction to our downgrade?

Europe is coming apart at the seams. Asia is desperately waging war against inflation while trying to rescue their wealth from a quagmire of rotting sovereign IOUs. And Bernanke has pledged to boldly stay the course, holding down interest rates at least through Q2 2013. If there is a glimmer of hope in all that, please share it with me.

Although commitment may be weak and the motivation vague, this week’s movement in the gold price strongly suggests growing investor awareness of the re-emergence of gold as the premier store of personal wealth. The silver price implies investors have forgotten that the metal always rides along on its stepbrother’s coattails.

That is bound to change very soon and today’s rock bottom silver prices will never be seen again.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Asia holds way too much US debt to not take any official recognition of our financial instability seriously. We, however, are the proverbial headless chicken, running blindly about in search of a scapegoat. Over the past two decades Americans have refined panic into an art form and in the process we have committed our economy to an irreversible deflationary spiral.

When an economy is left to find its own way inflation and deflation are just phases of an ordinary cycle between manageable extremes. Government interference, however, invariably succeeds only in exaggerating the extremes.

Several decades ago our government realized that it had set itself on a course necessitating continuously growing revenues virtually forever, in turn requiring a perpetually expanding economy. The government, with its ability to control the money supply, believed it had the power to control natural economic forces through infinite credit expansion. Drunk on fiat money, they saw no problems in such an idiotic notion.

One big presumption was that the public would forever jump at the opportunity of government induced cheap credit. Eventually, however, people reach a point where they realize that their indebtedness actually erodes their purchasing power. They lose faith in the monetary system and begin to deleverage. As they divest of assets, prices begin to fall and the economy slows.

Enter the Fed. They hoped to hoodwink the people by dumping money into the equity markets. The illusion of a strong market, they surmised, would give people the confidence to go deeper into debt. Instead, growing lack of trust in the government and a rapidly declining economy drove them to deleverage even more, further driving down asset values.

At first falling prices create growth in the apparent buying power of currency, and people rush to accumulate all the cash they can get. Meanwhile the government is going broke so it steps up its efforts to sway the public. The spiral tightens.

Most people keep hoarding cash, but when all else fails to curb deflation the government will surely fire up the presses. And chances are that will be all the spark needed to ignite runaway inflation – and possibly hyperinflation.

Only those who had the foresight to buy gold and silver will be spared.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

That’s rather narrow minded thinking. For one thing, I’ll take double digit capital gains over negative inflation-adjusted interest every time. As for principal, what can I say? If Mr. Brawdy measures principal in terms of rapidly fading fiat money, more power to him. I’ll take the hard stuff – something proven over the centuries to preserve purchasing power.

If you read between the lines I think it is clear that Brawdy’s main gripe is the now ragged theory that precious metals are in a bubble. As evidence he cites gold’s relatively mild decline in 2008 after which it quickly rebounded, nearly doubling the price. What he doesn’t mention is that it doubled from the trough, which was 70% of the trend. Instead of a 100% gain it was a correction with a 40% gain. Still very healthy, but consistent with the decade long bull trend.

Brawdy quite correctly states that “no matter how you look at it, there is no safety in a crowded trade,” and he’ll get no argument from me that crowded trade allows bubbles to form. I’m just a little confused about what he considers ‘crowded.’

For some, crowded brings to mind the streets of New York at noontime. To others a crowd is encountering another canoe on some backwoods Canadian lake. The gold market, which accounts for considerably less than 1% of total global financial assets, is far more akin to the latter. For almost everyone down here in the lower 48, that’s not even close to crowded.

We are all entitled to our opinions, regardless of how convoluted the logic behind them may be. Brawdy see things as he sees them and he feels compelled to show others the error in their ways. That is relatively benign, but sometimes misguided opinion given as fact can be extremely dangerous.

Brawdy’s offhanded dismissal of the threat of hyperinflation is just such a case. “That story has come and gone and the evidence clearly says no,” he proclaims. There is no such evidence and the threat has not only gone away, it grow stronger every day our politicians skirt the real issues and ply us with hype.

It is foolhardy not to consider threats and suicidal to ignore the very serious ones. Every one of us needs safe haven today more than at any other time in our lives. And contrary to Mr. Brawdy, gold and silver offer the safest haven, just as they always have and always will.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

So far gold and silver prices haven’t skipped a beat in a surprisingly strong upward surge. By all indications investors both here and abroad haven’t been fooled in the least. If anything, by committing to continued deficit spending while delaying proactive steps to address the real issues until after the 2012 elections, The Deal has underscored our government’s incompetency and complete lack of motivation to make hard decisions.

The deficit reductions outlined in The Deal are a mere pittance compared to the burgeoning deficit and unfunded liabilities. Nothing has been gained when it comes to getting Americans back to work, and until that happens we will continue to fall behind in our debt. Eventually the government is bound to try QE3 simply for lack of other options.

Further devaluation of the already emaciated greenback may provide us some temporary relief, but the effect will be a technical default on all of our debt. Don’t expect the world to rejoice over that. But the major foreign holders of US debt are caught between the proverbial rock and hard place.

They can’t unload all of their IOUs too fast or they would lose everything. But holding onto to them is far too risky to warrant the meager interest rates they are getting now. They will demand a credit downgrade to force up the interest on their notes and if that doesn’t happen they will be forced into accelerating their divestment of US debt. When you weigh the tradeoffs it becomes clear that we are very near the tipping point.

Regardless of how we get there and how long it will take, there is but one probable outcome. US debt will become so toxic that nobody will want it, even with double digit interest. Until such time as the world settles on a new reserve currency, precious metals will offer the only sound store of liquidity for the world’s reserves – and the only store of wealth for investors.

It looks like we won’t have the luxury of significant price dips this time around. Both gold and silver have all the markings of a market gathering steam for an imminent breakaway.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

It would be wonderful if at the close of the final scene Wall Street banks rushed in to save the day for those who so recently saved their necks, but let’s be real. This play is in fact a comedy, and the joke is on us. What will follow is only more posturing and mud slinging while the economy grows steadily sicker.

Still, I expect that somehow Wall Street, with assistance from government spin doctors, will manage to whip up enough deluded optimism to create a “correction” in precious metals. It might even be quite deep, but it definitely will not last long.

Silver, in particular, is ripe for opportunity. Equity bulls find the metal’s notorious volatility makes it easy to frighten investors away from the market. But that volatility had a lot to do with the CME’s ability to manipulate prices by changing margin requirements, and now there is competition.

Just a little more than a week ago Hong Kong Mercantile Exchange (HKME) began offering Asian investors an alternative to the CME for trading silver futures with contract minimums one fifth those of the CME. “The new contract will enable buyers and sellers in China to trade effectively with their counterparts across the world, while at the same time allowing investors to gain exposure to silver-price movements and broaden their investment portfolio,” explains HKME president Albert Helmig.

In other words, the exchange is facilitating movement away from dollars to hard assets throughout the Asian markets. And although trade on the HKME is currently in dollars, the exchange plans to allow trades based in yuan in the not too distant future.

It no longer matters what our government does because nobody is listening any more. The world is too busy coming up with real solutions to the problems we have caused. In the process the doors have been thrown wide to a vast new market of gold and silver investors.

In the face of what will unquestionably become an unprecedented surge in investment demand, any buying opportunity presented by “corrections” in gold and silver prices will be short-lived – and probably will not be repeated for a very long time.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

In the Daily Reckoning Bill Bonner presents a compelling argument that we stand at a crucial fork in the road: Straight ahead lies the end of the American Empire, while the path to the right leads back to the American Republic. While the politicians crack their whips herding us forward the markets urge us to take the other course.

Politics is all about control. In the 19th century our government extended its control westward to the Pacific in the righteous name of manifest destiny. Still not satiated, our government perverted its constitutional duty to protect its citizens to mean “making the world safe for democracy,” thereby extending its influence into every corner of the globe.

“Trouble is,” Bonner says, “politics is expensive and unproductive. The more of it you have – either at home or abroad – the poorer you become... until you can no longer afford it. That's the situation we're in now.”

It happened without the slightest debate. Nobody was called on to justify the ruinous course they had set us on. You see, we the people were also drunk on power. We were calling the shots, we liked how it felt, and we were determined to never back down. “In all the many examples of empires,” Bonner says, “none...not one...ever backed up. None ever renounced its imperial destiny. None ever thought better of it.” And none ever survived.

Americans are a proud people and we need a source for our pride, something to believe in. Nowadays, about all we have left is our military. In one way or another every one of our other cherished institutions has stabbed us in the back. So you go along with the imperial agenda, “even when it brings you close to extinction.”

Politics has gone to great lengths to demonize the alternative – the markets. Left to their own devices markets survive by bringing people together in mutually equitable agreement. It is political meddling in the markets – not the markets themselves – that has left a bitter taste in our mouths.

We hold America’s fate in our hands. Although most of those we put in office in 2010 have been swept up in the imperial agenda, “some people in the Tea Party...and even in the Republican Party...see what has happened.” We need many more like them, those who will heed the markets’ warnings and lead America back to greatness.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Unfortunately, most Americans go on about their daily routines ignoring the warning signs all around them. By sheer force of will we convince ourselves that it cannot happen here. It is almost as if we have willed reason out of our lives.

“Whether the US defaults or not, gold is meaningless. Euros have value; all currencies have value. Any value gold has is purely an illusion.” That comment posted in response to an equally idiotic opinion by Paul Krugman in the NY Times Opinion underscores the prevailing disconnect between what we perceive and harsh reality. The single greatest threat to our way of life isn’t some illusion about the worth of gold and silver, it is the illusion that fiat monies will survive indefinitely.

Americans greatly overestimate their ability to survive under the harshest of conditions. The truth is that very few of us are capable of growing the food we need to sustain ourselves. Even fewer could make it through just a few nights of subzero temperatures without modern comforts, let alone through a long winter. We fancy ourselves to be crafty innovators, but are you really capable of being a real MacGyver?

Park your car, shut off the electricity, and try to get by without making any trips to any stores for just one week. Now stretch the thought out over a year or more. How likely would that scenario have to be to move you to take precautionary measures?

Many, to be sure, would have to be convinced beyond doubt that such a situation was probable before taking action. There is little hope for their survival, just like those who get caught off guard year after year by floods, hurricanes, and tornadoes.

But most of us find taking prudent measures to avert catastrophe to be worth the time and effort. It doesn’t take all that much of either to stockpile food and water, even sufficient quantities to last a year or two. And it is even easier to secure our wealth – all it takes is build up a substantial reserve of gold and silver bullion.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

They remind me of Wiley Coyote, so caught up in trying to catch the Roadrunner that he is oblivious to perils everyone else can see. When his plans inevitably blow up in his face he doesn’t reconsider his purpose but instead forges forward with even greater determination towards an unobtainable goal.

Stocks are the individual investors’ Roadrunner, while gold and silver are plump prairie hens ready for the taking but completely overlooked.

I’d like to focus on silver today because of what Ian Wyatt describes in Seeking Alpha as “an extreme buying opportunity.” Wyatt, the chief investment analyst at Wyatt Financial Research, is highly recognized for his keen market insight and he makes a powerful argument for silver investing today.

Wyatt bases his judgment on the Commitments of Traders report from the Commodity Futures Trading Commission. The report breaks down the “long and short positions of three groups of traders - commercial traders, large speculators and small speculators … [providing] some of the best intermediate to long-term directional indicators available, particularly when an extreme is hit,” Wyatt says. And “currently all three groups are in an extreme.”

Specifically, while speculators are extremely bearish, commercial traders are extremely bullish. The last time those conditions existed was in 2009 and the silver price leapt from $10 to $40. The prospect is even more tantalizing now because “silver is also moving into one of the best seasonal periods during the year.”

In “30 out of 34 years, silver has had a positive return in September,” Wyatt notes. The opportunity is unmistakable but if individual investors remain true to form they will remain bearish until it has all but vanished. Wise investors, however, will start buying now and will be looking for possible dips over the next few weeks for even greater bargains.

I strongly advocate a buy-and-hold strategy over speculation for gold and silver investments, but on rare occasions such as this we get an excellent chance to play it both ways.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

I doubt that the debt ceiling fiasco will result in default but that’s immaterial. The US of A has made it abundantly clear that the global economy cannot rest easy until the monetary system is stabilized and the markets are once again operating under the fundamentals. The world has to find a substitute for the fiat money of a crumbling empire and the markets have to extricate themselves from the morass of self-defeating derivatives before we will ever see the runs of gold and silver level out.

Wall street bulls say record profits and the steady increase in corporate cash holdings this century prove that the upside for equities is just getting started. I see things a little differently.

Hording cash does nothing to promote growth. Corporations build up disproportionate cash reserves to hunker down for coming hard times. If there were a broad-based belief that consumer spending – the biggest slice of the GDP by far – was about to rebound, corporations would be shoveling cash right and left into capital to maximize profits during the upswing.

Still, we can expect gold and silver prices to stutter as the Fed throws Wall Street a few more bones to keep the illusion alive for a while longer. We may even see a significant dip or two as pundits postulate and investors panic. But nothing on the horizon even remotely suggests a reversal – or even moderation - of the fundamentals driving gold and silver strongly upward.

The excess assets from silver’s big selloff that started in May have been absorbed by bargain hunters and gold has been idling a little too long. Meanwhile the fundamentals have been building up a head of steam that could blow at any time.

So, uncharacteristically, I’m feel obliged to make this prediction: within the next 12 months gold will break the $2,000 mark and silver will pass $50 per ounce, finally breaking its non-inflation adjusted record. And for what it’s worth, I’ll toss this in: once clear of those barriers gold and silver prices will continue moving much higher and much faster than anybody suspects.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Maybe there is still much apprehension about precious metals, and with the equities market humming along so nicely why take the risk? Why indeed. Except I ask why take the risk of equities?

It’s time to poke a pin in that balloon. A return of more than 23% on those equities is pretty darned impressive, isn’t it? But hold on, we’re talking dollars here and I don’t care what Forex has to say about them – I think the greenback has tanked. So let’s run the numbers with hard money – gold and silver.

Since Bernanke fired up the presses last August the S & P 500 fell some 2% against gold and the DIA dropped 2.5%. In terms of a sound currency, the Swiss franc, The S& P managed to squeeze out a mere 0.16% while the DIA sank a half point.

What about silver? Over that same period both the S & P and the DIA lagged silver by more than 30%. Seems to me all the equity market hype is just more of the same old government propaganda.

There is just one reason for precious metals to perform that well against the stock market: a broad devaluation of equity. It is well underway now, eroding the wealth of millions of Americans, and it won’t stop until there is no more wealth to consume. The progress so far has been relatively slow, giving individuals ample time to prepare. But once the tipping point is reached, it will be too late.

The choice is simple: risk losing everything without a moment’s notice, or get serious about gold and silver investments today.

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Shannon King

Senior Staff Writer - GoldSilver.org

Inflating credit in a never ending cycle of lowering interest rates and printing cash “will not, and cannot, solve the problem that has been caused by monetary expansion in the first place,” Polleit says. More important, such interventionist government policy “will increasingly undermine the free-market order.”

Bernanke’s policy of injecting mountains of fiat money into the economy serves only to further devalue the dollar “without solving the underlying root cause of the problem,” Polleit says. The logic behind the Austrian School’s belief that monetary reform must follow the principles of a free market is inescapable, yet the preponderance of current thought runs contrary to the idea.

The problem lies with the stranglehold central banks have on the field of economics. Current ideology is deeply entrenched in our universities and careers can be ruined by contrarian opinion. That “has reduced the numbers of supporters who effectively make a case for sound money to a tiny group whose voice is easily lost,” says Polleit. The public, with but a meager understanding of economics, is justifiably biased against that case even when the voice is heard because people have yet to understand all they will gain from a sound money policy.

None-the-less, Polleit warns that “finding an economically viable solution to the problem at hand is a challenge that the societies that have adopted fiat money will not, and cannot, escape.” As news such as the latest jobs report – a pathetic 18,000 net jobs added when forecasts called for 125,000 – keeps piling up, there are increasingly stronger signs that the public is beginning to understand that the government cannot, or will not, initiate any real reform. From there it is but a baby step to taking matters into their own hands.

When people start buying gold and silver en masse, it will be only a matter of time before the markets declare the metals to be the only acceptable medium of exchange.

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Shannon King

Senior Staff Writer - GoldSilver.org

Gold is and always has been money – real money. While industrial demand is a powerful force, it pales in comparison to that basic fact. We are rapidly approaching a turning point in global economics as the era of fiat money comes to a close and nations seek out a means to stabilize the money supply.

Monetizing gold in some form is the obvious solution, and experts agree that is where we are heading. Highly respected analyst Chris Martenson calculates that to back 100% of today’s money supply with the gold currently in the reserves of central banks the price of gold would have to be over $60,000 per ounce.

Granted, that is a fantastical figure, but the implications are clear. Even if central banks shrink the money supply to some reasonable level and buy up sufficient gold to back a prudent percentage of the remainder, the price of gold would still reach currently unimaginable levels as a balance is reached between the stress on supply and effective monetization.

Silver, on the other hand, “is an industrial metal with a host of enviable and irreplaceable attributes,” Martenson says. “It is widely used in the electronics industry. It is used to plate critical bearings in jet engines and as an antimicrobial additive to everything from wall paints to clothing fibers. In nearly all of these uses, plus a thousand others, it is used in such vanishingly small quantities that it is hardly worth recovering at the end of the product life cycle.”

Because of that above-ground silver reserves have dwindled to “perhaps 1 billion ounces … when in 1980 there were roughly 4 billion ounces.” As demand from emerging economies climbs steadily upward, production lags ever farther behind. The net result will be silver becoming increasingly scarce and prices will rise accordingly.

While the gold and silver markets have vastly different fundamentals driving them, the outlook for both gold and silver investments is particularly bright.

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Shannon King

Senior Staff Writer - GoldSilver.org

They survey also reveals a tight correlation between sentiment about the economy in general (58% say it’s getting worse) and personal financial condition (56% say it’s worse today).

As we celebrate the spirit of America it seems odd that as individual investors we continue to follow the flock rather than assert our personal independence, that we turn a blind eye to the handwriting on the wall in favor of propaganda that is clearly contrary to what is going on all around us.

But another Rasmussen poll hints at a minor revolution emerging among the voters. The under forty crowd no longer believes in one of our most cherished entitlements – Social Security. A full “69% of under-40 voters say it’s not likely they’ll receive all promised benefits , including 43% who say it’s Not at All Likely,” and they are strongly in favor of turning the decision about when to retire over to the individual “Those who want to retire earlier could pay more in Social Security taxes now. Those who would prefer lower taxes today could pay less in taxes and retire later.”

Surprisingly 65% of all Americans - and even a majority of seniors – support the idea. There is a growing distrust of politicians to implement any real change and “64% believe that any proposed changes in either Social Security or Medicare should be submitted to the American people for a vote before they can become law.” It’s a small thing, but a comforting sign that we are at least beginning to think about taking back control of our country.

But I guess I’ll have to wait a while longer for a sign that individual investors are taking back control over their portfolios and are turning to the security of gold and silver investments..

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Shannon King

Senior Staff Writer - GoldSilver.org

Hooray for Greece! They have promised austerity in exchange for another handout! Just don’t look too closely at the books or ask the population what they really think of it. Then again, it is after all, only a promise – and government promises are meant to be broken.

Our government, however, has the experience of the cold war behind its propaganda machine, and they are darned good at the game. The Fed was a quick learner, and with the government’s blessing it invented the cockeyed statistics that made the credit bubble possible. Corporations, now indistinguishable from the Fed, have picked up the torch.

“A new report from TrimTabs, the investment analysts, has blown the whistle on what really went on behind the stock-market ‘boom’ we saw in the first quarter,” says Brett Arends in MarketWatch. It seems that $124 billion of that boom came from the companies themselves, buying back their own stock.

That alone might not be interesting, but the execs of those companies weren’t buying. “We’ve never seen such a sharp contrast between what insiders are doing with their own money and what they’re doing with the money of the companies they manage,” says Charles Biderman, TrimTabs’ CEO. “While insiders are willing to use corporate cash to try to support the value of their stock-based compensation, they don’t seem to think their stocks are attractively priced.”

We must give credit where credit is due. Mr. Bernanke’s low interest policy allowed these companies to float $100 billion in credit over the first three months of 2011. Some used that cheap cash to fatten dividends so they could lure in more investors. Others used it to buy their own stock to fatten their bonuses. Very little of it went to bolstering the economy. And today the nonfinancial corporate debt is nearly 11% higher than it was at the peak of the credit bubble.

It is all a game, and Americans are awakening to that reality. We are already tapped out, and we are beginning to see that the government is not so far behind. Propaganda works for just so long, until what we observe belies what we are told. We are beginning to understand that before we can rebuild, the status quo must first collapse.

We know that gold and silver investments today will see us through tomorrow, and we know that gold and silver prices will never be better than they are right now.

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Shannon King

Senior Staff Writer - GoldSilver.org

In the first place, nothing containing gold or silver is or ever will be junk. More import to consider, however, is the nature of the melt business.

There’s a simple reason the business is booming – gold and silver prices are certain to climb to unimaginable heights as the economy tanks, and swindling a swelling number of desperate and vulnerable people out of their gold and silver at bargain basement prices is a great way to make some very big bucks very quickly. And there is very little control or even oversight to discourage misdealing.

Yet people seem to trust the dealers implicitly, often mailing in their gold valuables and then waiting to be told what they are worth. There is no guarantee of reliable assay.

“Junk silver” in the form of pre-1965 coins is easier to valuate, but there is a better reason to hold onto them as well your gold.

For one thing, there is no fear of depreciation. Wherever the price of gold and silver goes, the metals’ worth in terms of what it can buy is virtually constant.

But the real worth of junk gold and silver is as a practical medium of exchange. According to many experts the collapse of the dollar is all but certain. Should that happen, only gold and silver will buy the things you need to survive. But you wouldn’t want to hand over a Gold Eagle worth over $1500 in today’s currency just to get a few loaves of bread – what would you get in change?

Gold jewelry and other small items would be easier to exchange and would impose much lower risk, and silver coins would be hard to beat for small transactions. US dimes, quarters, and halves minted before 1965 contain silver in direct proportion to their face value ($2.45, $6.13, and $12.26 respectively at last close), making their relative worth universally understood.

You certainly would not want all of your gold and silver to be “junk” – unless you have a huge bank vault to store it all in – but it is extremely prudent to have a sizeable emergency reserve.

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Shannon King

Senior Staff Writer - GoldSilver.org

It wouldn’t hurt to read – or reread – “The Death of Common Sense: How Law is Suffocating America” by Philip Howard. That gem, first published in 1994, still does an excellent job of portraying the root cause of the predicament we are in, detailing the perversion of the government as envisioned by the Constitution into the unsustainable all-encompassing paternalistic bureaucracy it is today.

Howard’s work is even more pertinent today as it explains why all efforts to revive the economy under the status quo are doomed to failure. Our country was built on individualism, a proud spirit derived from the freedom to make of our lives anything we dare to dream. The Constitution grants us that freedom and protects us from government coercion. Nothing more, nothing less.

The Constitution is elegant in its simplicity and flexible in its intent. It provided the structure by which the greatest nation in history was built. But then we got the bright idea that our government was capable of even greater things if only it had more power.

Perhaps the motive was benign – the intent was indeed to create a perfect society – but the effect was unequivocally disastrous. In its quest of unachievable goals the government stripped its citizens of the very qualities that defined them and brought the country to the brink of financial ruin.

That’s all history and it cannot be undone. It’s time to start over. Real change cannot come from the status quo because the bureaucracy has declawed itself. We will just have to wait until it implodes before we can rebuild.

When the dust finally settles we will need a true revival of the American spirit – and every bit of wealth that we preserve today in gold and silver investments.

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Shannon King

Senior Staff Writer - GoldSilver.org

The answer is simply that the world remains addicted to fiat currency, and of the contenders for global reserve the dollar is the least rotten apple in the barrel. “When it comes to fiat alternatives, it appears the world would be going out of the frying pan and into the fire,” Schiff says.

Consider the most widely discussed alternatives: the euro, yen, and China’s renminbi.

The euro is proving to be a failed experiment. The region’s dominant economy by far is Germany and they have unequivocally declared that they are not about to let the rest of the region carry them into another Weimar hyperinflation. And the eurozone PIGS (Portugal, Ireland, Greece, and Spain) have demonstrated a willingness to revert to their own currencies in order to inflate their way out of debt. “That prospect is undermining confidence in the euro at just the time when the world is considering where to go next,” Schiff says.

The yen isn’t really a true contender because Japan doesn’t want it to be the global reserve. The country has the highest debt-to-GDP ratio among developed countries, but most of their debt is domestically held. However, Japan is heavily dependent on its trade surplus to maintain stability. Making the yen the new reserve would undermine the government’s persistent efforts to hold down the yen’s value, exacerbating the debt problem while destroying their trade advantage.

That leaves China, and they have made no bones about their desire to have the renminbi be the new reserve. But the country has only recently begun to loosen its grip on the currency, and their true intent is questionable. China is still a communist country that has consistently proven unwilling to give its citizens free economic reign and has yet to prove its viability in a truly free and open market.

The logical alternative, of course, is to forego fiat money all together and make real money the new reserve. As Schiff says, “Throughout human history, merchants have always turned to pure gold and silver over every pretender.”

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Shannon King

Senior Staff Writer - GoldSilver.org

That day is coming. Lately we have seen a sharp increase in frank, hard-hitting discourse coming not only from the media but from also from the political machine. Alan Simpson, co-chairman of President Barack Obama's debt commission, says simply that politicians “can't bring home the bacon anymore, because the pig is dead.” Things must change, not only in Washington but throughout the electorate as well.

The Wall Street Journal’s Peggy Noonan notes “that people like government programs but not government costs,” and that is the crux of the problem. We want our cake and we want to eat it too. Perhaps the “government gives insufficient respect to the ability of people to decide things for themselves … [but] normal humans don't relish making informed decisions about things they're not sure of, and that carry big personal implications.”

It remains to be seen how much more negative news must be heaped on our backs before we get over that. A Wall Street Journal News Wire tells us that unemployment is back on the rise and “the jobs market will still take years to heal as the economy remains weak.” Another tells us “New orders, production and export measures all plunged” as U.S. manufacturing growth ground down to its lowest level in nearly two years.

The politicians, meanwhile, remain mired in politicking, spinning away while Washington burns. One brave soul dared to question how we were going to pay for aid to victims of the spate of tornadoes and was soundly thrashed for his rational thinking. How can we expect them to address the really big issue of Medicare? “It is a long time since I've seen such transparent demagoguery, such determined dodging,” Ms. Noonan says.

It is transparent, to the point where it is becoming impossible not to see reality through the haze. Americans hate being duped, even though we set ourselves up for it with alarming regularity. We want to believe, but once we finally come to realize that our faith has been misplaced it can never be restored.

Once we acknowledge that the government has failed us, and that the economy has to get much worse before it can get better, people from every walk of life will find that buying gold and silver bullion is the only logical recourse for preserving their future.

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Shannon King

Senior Staff Writer - GoldSilver.org

As a people we have lost sight of the need to sacrifice to preserve our future wellbeing. Over the past few generations we have come to rely on the Federal government to bail us out of every circumstance our reckless consumption leads us into.

The crisis in health care is one example. As the costs of care have skyrocketed far past inflation, carrying the cost of insurance with it, a growing percentage of the population has opted to forego the expense of health insurance. Their reasoning is simply that should a crisis arise, they will be cared for regardless, at the expense of everybody else. But that is a personal choice, and should not be their neighbor’s burden.

The same reasoning holds true for those who were suckered into believing they could afford a champagne home on a beer budget. And it holds true for those who fail to prudently insure their property against natural disasters. As millions upon millions of Americans become victims of disasters, we hear stories of those who got wiped out and have no insurance to help them rebuild. Only now the government’s pockets are empty.

It is indeed tragic, and we empathize deeply with the victims for their losses, but we are not responsible for those who fail to help themselves. That cold hard fact is only now being realized because there is simply no money left to pass wantonly around to anybody and everybody who has their hand out.

It is up to every citizen to reevaluate their priorities and take whatever measures they are capable of to protect themselves in case of disaster. Above all else, we cannot rely on the government to be our parents in our later years. The issue of how much money we were taxed towards that end is moot. The government is broke and at best it will take decades to recover. The time has come to fend for ourselves.

One absolutely essential thing we must all do is preserve our wealth for the eventuality of a prolonged economic decline. How much would you be willing to do without today in order to build a prudent reserve of gold and silver that would insure you against loss of wealth and provide for your needs when Uncle Sam’s well runs dry?

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Shannon King

Senior Staff Writer - GoldSilver.org

What possible connection does the trade of giant paper funds have to do with the real value of gold and silver? Absolutely none. ETFs are investments run by pro traders. While their price initially is tied to a quantity of the metals, it quickly degrades to the status of any other equity. The only reason that they are worth mentioning at all is that they can give us cues about when to buy and sell.

So when iShares Silver Trust dumped over 11 million ounces of silver this week, the metal took a quick dip, but it lasted just one day. When SPDR Gold Trust gobbled up more than one half million ounces of gold in the same period, the price barely jiggled on its upward trend. In truth, gold and silver are exactly the same story today – they are a safe harbor for wealth.

The intrinsic value of gold has been remarkably constant over time. In the long run silver has been likewise, but the price is also driven significantly by surging demand that is not even close to being compensated by increased production. The point is that unlike ETFs physically held gold and silver are not meant to be treated as investments and their “performance” according to traditional measures is meaningless.

The investment game is about turning your wealth over to somebody else, who then pays you interest or dividends for the use of your capital according to the risk of losing that capital. Invariably the money that your money makes, however, is insufficient to keep pace with real inflation. When you cash in your investments they are very likely to be worth less in real terms then when you bought them.

Wealth stored in physical gold and silver, on the other hand, is real money, not connected to endangered currencies or subject to the discretions of any third party. When it is taken out of storage it will have the same value as the day it was stored.

That’s the way it is. That’s the way it has always been. And that is how it will always be. Prudent investors do not gamble everything – they always have a growing reserve of physically held gold and silver bullion to fall back on.

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Shannon King

Senior Staff Writer - GoldSilver.org

“Common wisdom” says that the additional premium imposed on collectible coins makes for a poor investment. But that premium is an investment in itself, which is much more stable than the precious metal content of the coins.

Rare coins have the interesting attribute of fixed supply. That means there never will be any more produced, and the available supply is almost certain to diminish as interest in them grows. Even with supply and demand static, the rarity premium would remain a constant value relative to currency, that is, it will rise with inflation.

Investor demand, however, is steadily growing, heating up competition for the gold and silver coins in greatest demand. As investor participation in the physical gold and silver market continues to grow, rare coins’ double potential for returns will become ever more appealing.

There is a common misconception floating around that the risk of being sold forgeries or overvalued coins is too great for anyone but expert numismatists. But that is totally unfounded. Modern grading and certification services make it possible for even novice investors to buy rare gold silver coins with total confidence.

There is little doubt that gold and silver will continue to follow their strong upward trends for years to come. Over time there will of course be peaks and valleys, and we can expect a few to be severe. Today’s prices are hanging in one of those valleys, and that just makes this an ideal time to buy.

And if price volatility makes you nervous, consider rare coins. Their content of gold and silver will grow with the trends and their premium will grow with demand while their status as collectibles will smooth out most of the bumps in the road.

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Shannon King

Senior Staff Writer - GoldSilver.org

The commodities market certainly is the playground of high rollers. They bet on movements in price without regard to actual current value. And gold and silver prices are not immune to the whims of the speculators. But both metals have an advantage over the other commodities – an intrinsic value that has persisted over centuries.

The value of gold and silver, averaged out over the long term, has proven to be remarkably consistent in terms of the only meaningful measure – purchasing power. While speculation falls under Wall Street’s cherished definition of investment – those thing that have the potential for creating dollars out of nothing – long-term holding of the metals does not. But what good does it do to double your cash when cash is now worth half what it was when you invested? It makes even less sense when the dollar is falling faster than your gains.

True, the gold and silver markets tend to be volatile, but there is an age old method to even it out, one very familiar to most investors: averaging. Instead of making one large yearly investment, hoping to come in at the best price, you simply make equal monthly (or even weekly) purchases of gold and silver. By year’s end accumulated wealth in gold and silver will be in line with the long-term trends.

The key is consistency, regardless of what is going on in the market. When you take physical possession of the gold and silver bullion you purchase you will build a reserve that will always be under your control and won’t diminish in true value. They don’t make money because they are money.

The dollar returns on traditional investments may well become worthless, but consistent long- term investments in gold and silver will build indestructible wealth.

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Shannon King

Senior Staff Writer - GoldSilver.org

Mainstream media has convinced the public that gold and silver investment makes sense only in a very narrow set of circumstances – as a hedge against inflation and as a store of wealth in economic decline. Even though only the most myopic can fail to see that those are the exact conditions today, there is something else we all need to consider – the all or nothing scenario.

The possibility of hyperinflation is something we absolutely must consider for our individual well being, but we Americans have no frame of reference by which we can weigh its repercussions. And the status quo does everything in its power to convince us it cannot happen here, labeling those who try to warn us as paranoid extremists.

That, however, is slowly beginning to change as more and more traditionally conservative pundits are raising the specter of society degenerating under a rapidly declining currency. Human beings are civilized only to the point that survival is not threatened. Once hyperinflation sets in an ugly change takes place as competition for scarce necessities heats up. Power flows to those who control the most vital resources and the rule of law disintegrates. Psychologists call it “societal regression.”

For a while people can get what they need by bartering their possessions but the value of such things rapidly declines as the resource holders accumulate everything they could want. No longer able to trade for their basic needs, people must either take them by force or perish. Unless, of, course, they possess some form of universally accepted and valued currency.

Even a slim chance of that scenario occurring demands taking a proactive stand. No quantity of stock certificates, IOUs, or greenbacks will be of any use. Hoarding canned goods, guns, and ammo would only delay the inevitable. But a substantial reserve of gold and silver coins would carry you through.

It could well turn out to be all or nothing, and in that case the return on gold and silver investments cannot be matched.

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Shannon King

Senior Staff Writer - GoldSilver.org

After I calmed Harry down a bit I asked him if he sold off his silver coins. Fortunately he had not. If he had, he still would have made a handsome return, but barring some global cataclysm the price had certainly bottomed out and would get right back on track. But I learned something from Harry’s reaction.

There is a common problem people have - their perception of what gold and silver investment is all about. To begin with, did Harry lose anything at all? Of course not, because he didn’t sell. His coins didn’t get any smaller and he still had just as many. Only one thing matters in gold and silver investments: how much purchasing power does Harry’s investment have today compared to when he bought the coins.

Pundits like to say that gold and silver investments do nothing, but it is odd that by doing nothing they consistently beat out all competition in real terms. That is because fiat currencies are the poorest measure of wealth and every asset based on them will always lose purchasing power over time.

The value of gold and silver coins, however, is constant over generations. There will always be short-term variations – volatility – created by speculation, but in the long run prices will reflect the true value of currencies. The more the dollar declines, the higher the price of gold and silver will be.

People like Harry don’t need to get rich on the market. That’s a gambler’s game and the deck is stacked in the house’s favor. Instead they work hard accumulating wealth throughout their lives. In times such as these, however, the possibility of severe wealth erosion with traditional investments is very real.

On the other hand, investing in gold and silver coins will protect your hard earned wealth against inflation and dollar devaluation – in my book that is doing one heckuva lot.

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Shannon King

Senior Staff Writer - GoldSilver.org

The violent drop in silver prices was clearly panic driven as investors, egged on by big money, recalled past bubbles bursting. But it is time we stopped listening to those who have an axe to grind and instead stay focused on what really matters. Thomas Pynchon said in his book “Gravity’s Rainbow” that “we have to look for routes of power our teachers never imagined, or were encouraged to avoid.”

Power tomorrow will come to those who saw today’s economy for what it truly is, those who disregarded the rosy picture painted by mainstream media and took a strong preemptive action to protect their wealth. The bare fact is that we are “not getting a fair analysis,” ShadowStat’s John Williams said in an interview with the Gold Report. “We have some particularly poor-quality economic reporting right now.” Whatever upside is being reported is “largely tied to short- lived stimulus factors.”

“Without significant growth in credit or a big pick-up in consumer income,” Williams said, “there's no way the consumer can sustain positive economic growth or personal consumption, which is more than 70% of the GDP.”

The Fed may keep us afloat for a while longer with its antics but the tipping point is just around the corner. Our AAA credit rating exists only because under the current global monetary system we alone can print money to pay on our dollar-based debt. Default is virtually impossible under those conditions, which is why we set the benchmark for the rating. But when nations start to insist our debt be based in other currencies that advantage will vaporize and our rating will plummet.

That is no remote possibility and it won’t take an inconceivable global consensus to begin. Oil represents an enormous proportion of global trade, and talk has it that OPEC is already considering changing its basis to a basket of currencies. Without the dollar underpinning that trade inflation will immediately skyrocket stateside and the dollar’s value will plummet. “We're seeing all sorts of things happening now that are accelerating the inflation process,” Williams says.

The powers that be are driving our economy straight into the ground, but future power will belong to those who broke away from traditional advice and assured the preservation of their wealth. You can begin by seizing the opportunity to invest heavily in gold and silver at today’s bargain prices.

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Shannon King

Senior Staff Writer - GoldSilver.org

A lot of reasons have been given for the drop, but this one smacks of manipulation. “The Chicago Mercantile Exchange raised margin requirements on silver futures four times in two weeks. While margin requirements must go up when prices go up, four times in two weeks sure is grist for those who say the big banks are short silver and will do anything to derail silver’s bull run,” says Sean Brodrick in MarketWatch.

There has also been a selloff by some major players seeking to lock in their profits, an action that always sends ripples through individual investors, who make up a sizeable portion of the silver market. But long-term investors aren’t phased by these quirks of the market because they know that the drivers have not changed.

Silver today enjoys an ideal combination of strong driving fundamentals – increasing industrial demand, inadequate production, and a strong presence of individual investors seeking safe haven - everything needed to keep this bull running far into the future. “Both gold and silver are in big bull markets. Until that changes, pullbacks and corrections are buying opportunities,” Brodrick says.

Silver was on a well establish track before the drop and there is every reason to believe it will quickly rebound. No matter how you slice it, silver is vastly underpriced right now and it cannot last. If it should drop even lower before turning around, it would just be a signal to buy more.

The plain truth is that gold and silver will grow as long as the dollar falls, and any short-term gains the dollar makes will be transitory. At a time that cries out for gold and silver investments for wealth preservation, today’s silver price offers a rare bonus opportunity for wealth creation.

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Shannon King

Senior Staff Writer - GoldSilver.org

Silver prices have dropped dramatically, but such is the market. Industrial consumers have been hard hit by the bull market and they are beginning to exert pressure to keep prices in check. But the temptation to leverage today’s prices is certain to make this lull very short. The demand is still there, production is still inadequate, and when the thrill of the moment passes investors will pick up where they left off, seeking safe haven amidst an ever worsening economy.

Despite global monetary tightening the Fed is adamant about holding down rates here, still believing that lower rates will get the economy going. But jobs fell far short of the hoped for 200,000 gains and the Institute for Supply Management's nonmanufacturing index last month was more than four full points below the expected 57.

There is a growing belief that the Fed will go back to the only thing it knows how to do – print more money. Bernanke stills sees that as the worse of two evils, believing that the world will just sit back and take it. And if the Fed got wise and let rates go up, it would put a stake through the heart of the economy. Contrary to “common knowledge” rising rates don’t alone make gold and silver investments unwise.

The academics’ mantra that gold and silver do nothing, and are therefore unworthy of investment dollars when rates are on the rise, is based on the obsolete notion of measuring wealth by a now failed currency. In real terms, however, our wealth is eroding by over 4% per year in ultra conservative terms. Simply not losing wealth, which is inherent in gold and silver investments, is a pretty good return these days.

In America the worst is still ahead, and it could become far worse than most imagine possible. No brief moment of ecstasy can change that. Both gold and silver have a long way to go before there is sufficient improvement in the economy to warrant any change of strategy. Today’s gold and silver prices are nothing more than opportunity’s knock.

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Shannon King

Senior Staff Writer - GoldSilver.org

The price of silver is becoming problematic to commercial consumers, so it is only natural for them to wage an all out war to keep prices in check. But efforts to compare the current trend to the great Hunt brothers fiasco three decades ago has no merit.

The current bull trend in silver has been steady and strong, driven by the fundamentals and fortified by broad investor demand for safe haven. Limited production and growing awareness of the frailty of the US economy are long-term drivers that can only intensify in the months and years to come.

Weiss Ratings Service, a highly respected independent agency that covers 19,000 U.S. banks, credit unions and insurance companies, accurately assessed the condition of huge financial institutions in the 1990s while the major services refused to lower their AAA/Aaa ratings. Those who paid attention were spared the most devastating effects of the collapse.

Now Weiss has introduced the Weiss Sovereign Debt Ratings of 47 governments. Using the same unbiased techniques as their commercial service, Weiss places the US government 33rd – fourth last in debt burden, 32nd in international stability, and 27th for economic health. If we hadn’t ranked sixth for our ability to borrow globally we would have fallen much lower on the chart. As it is we were soundly beaten by Russia and even Mexico fared better than we did.

A group at MIT took up the challenge of pinning a real figure on inflation. Their Billion Prices Project uses the internet to continually gather actual current price information from around the globe and uses that massive database to calculate inflation. Over the past few months their figures put inflation in the USA at an annualized 7.4%. Factoring in population growth, our economy is shrinking at more than 5% annually, based on the government’s own figures.

Even the labor market’s reported growth by some 200,000 jobs a month is barely enough to compensate for the growth in the labor pool due to population expansion.

Both gold and silver prices are on very solid footing, and neither is even close to the end of its run.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The Fed’s announced policy remains unchanged, and all indications are that it will continue for at least three months. That is singularly inexplicable, but completely expected.

While we pursue the cheap dollar fantasy the other, more responsible central banks continue to call for austerity as they tighten monetary policy. It is not the least bit coincidental that recovery in those economies has far outpaced our own, in which growth has plodded along at a dismal 2.8% annually. And last quarter it plummeted to 1.8%.

Still, I suppose for Bernanke’s purposes that will do. But even that was largely due to strong exports, which took advantage of the intentionally cheapened dollar. That advantage cannot be sustained, however, as nations everywhere are poised to take defensive action.

How can Bernanke state that “the Federal Reserve believes that a strong and stable dollar is both in American interests and in the interests of the global economy” and then say that he will continue to implement policy that assures a weak and volatile dollar? He must think everyone else is a fool. In truth, at least in America, he has proven to be mostly correct. But the global community is on to the con.

There must be some reason to continue down a path towards hyperinflation, and Bernanke gave his – he recognizes that first and foremost he must deal with the debt because nothing else can be accomplished until the country is solvent. He must also believe that our government is incapable of taking practical and responsible steps to that end. So he has elected to take the quick fix of inflating our debt away.

While the dollar remains the world reserve, it could work. “But there is little indication of a change in policy from either the Fed or Treasury—or in underlying economic conditions—that would alter the currency's downward course,” says the Wall Street Journal.

It is that realization that is driving gold and silver prices to new levels every day.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Rome is burning but Bernanke is still fiddling with the economy and the politicians are too busy with their power struggle to do anything meaningful with the deficit. The tribes are descending while we rest on our laurels. Time is getting very short.

According to the IMF, in terms of purchasing power parity – a measure of real economic strength that normalizes economies of different countries to a common unit – China will become the world’s leading economy in 2016, says Brett Arends in MarketWatch. That will cap forty years of astounding growth, while we just sat back and watched.

While we were engrossed with patting ourselves on the back for defeating communism in the cold war, China was studying both us and the Soviet Union and plotting their path to global dominance. Unfettered by the constraints of a free society China was able to orchestrate “a massive shift in capability from the U.S. to China,” Ralph Gomory, research professor at NYU’s Stern business school, told Arends. “What we have done is traded jobs for profit … That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages.”

We could get lucky, of course. Many believe that China’s economy is set to hit a speed bump, even though every time that was predicted in the past it kept charging on. Even if it does, however, it would only buy us a little time. And our economy is far to anemic to take advantage.

China is going to take over the reins, whether that happens in 2016 or a few years either side is irrelevant. They will have the power to redefine the rules, which they will do with absolute certainty to serve their own best interests.

For a while there is going to be chaos in the markets. But as history has repeatedly demonstrated, wealth held in gold and silver investments will endure.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

“Investors also didn't want to spend a three-day weekend without some sort of protection,” said the Wall Street Journal’s Tatyana Shumsky. Think about that statement a minute. It takes a heap of worry for one extra day to make a difference. So what happened?

There’s the S&P report, of course, but why would they “need a ratings agency to tell them something that should be as plain as the nose on their face?” said Brett Arends in MarketWatch. Then there was more bad news about the unemployment picture, but that is old hat. Even mainstream media has taken up the cause to belie the fed’s doctored statistics. And the pathetic Philadelphia Fed Index on manufacturing released yesterday really shouldn’t have surprised anyone.

What did happen was all of those things occurring in one short span lifted the curtain on the wizard. Already greatly maligned for its reckless monetary policy, the Fed is losing what little credibility it had left as its claims about the state of our economy get exposed for the con they are.

When you add in debts to the Social Security Administration – which are on that agency’s books as assets – the gross federal debt is closer to 100% of the GDP than the 70% figure Bernanke likes to use, says Arends. And the real national debt – the total indebtedness of the non-financial sector – is more like 200% of GDP.

In short, the Fed has understated the debt and overstated the results of its policies. Now it will soon be faced with mopping up the liquidity from QE2, and only the permanently deluded expect that to go well.

“The dollar landscape looks ugly, with the greenback vulnerable to further setbacks,” said the Wall Street Journal’s Andrew J. Johnson. The ICE Dollar Index plunged to its lowest mark since the beginning of the financial crisis this week and it is unlikely that confidence in the greenback will ever be fully restored.

With gold and silver next in line to take the dollar’s place as global safe haven, this week was just a preview of things to come..

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

The thing is, S&P is American through and through, and its bias during the financial meltdown was abundantly clear as it held onto AAA ratings for the junk that brought down the market. For it now to put out the slightest negative word about the US “is a disquieting, game-changing thought for a lot of the world … and now these people have turned to [gold and silver],” George Gero, vice president with RBC Capital Markets Global Futures, told the Wall Street Journal’s Tanya Shumsky.

It is getting ever harder to rein in inflation and a drop in credit rating would be the final straw. “Since 1989, S&P has issued 212 sovereign debt ratings with negative outlooks, subsequently lowering those ratings 118 times, or 56% of the time. Those downgrades usually take place within six months of the outlook change,” said Dave Kansas in the Wall Street Journal. Even S&P puts the odds of a credit rating reduction at one in three.

In 2009 England faced a similar downgrade in outlook but the country responded by implementing a strong austerity program and a year and a half later had its stable rating restored. Our government, on the other hand, is responding with more of the same arrogant off-handed dismissal of the change. That just won’t work any more.

Japan, the second largest holder of our debt understandably proclaimed its faith in the dollar. China, the largest holder, took proactive measures and escalated its program to globalize the yuan while continuing to stockpile gold. That symbolizes the choice every American has to make.

We can cross our fingers and trust the government to get us out intact or we can be proactive, putting as much of our wealth as we can into gold and silver coins, real money that will survive the worst of times.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

While “the wiggly lines that make up the bigger uptrend will provide better times to buy and sell the metals,” said Brien Lundin, editor of Gold Newsletter, the overarching message is to stay in gold and silver because there is simply no other way out of the federal debt crisis than to inflate the debt down to manageable size. “You're not in a late phase of inflation, you're in an early phase,” Ira Epstein of the Linn Group said in the Wall Street Journal.

Lundin tells investors to buy “gold and silver bullion as financial ‘insurance’ — a core holding that they shouldn’t trade.” Robert Barone, portfolio manager for Ancora West Advisers, says “Stay completely in (or even add to your holdings) if you believe that the U.S. dollar will continue to get weaker due to inflationary economic policies.”

That’s the rub – a great many Americans have little concept of the enormity of the deficit problem, and therefore don’t understand that inflation is unavoidable. Yet according to Rasmussen Reports, “Congressman Paul Ryan’s Republican alternative puts a balanced budget at least 25 years away.” And that’s the biggest hammer our politicians have been able to come with.

According to a recent Rasmussen survey most Americans believe that a balanced budget is good for the economy, but most “dramatically underestimate how much is actually spent.” Less than half believe cuts to defense, Social Security, and Medicare are necessary, and 37% believe they are not – roughly the same number as those who didn’t think that the majority of federal spending goes to just those three things. A different survey showed that a great many Americans know it would take higher taxes to balance the budget but only 20% are willing to pay them.

None-the-less, “investors are frustrated with U.S. monetary policy. They're saying the heck with the dollar, the heck with currencies, and they're buying metals,” Epstein said.

The frustration will continue to spread, drawing more and more investors into long-term gold and silver holdings, and that will hold prices to their strong upward trend.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Oh we’ve known all along that the Fed shoveled trillions into Wall Street banks, turning “companies facing bankruptcy into monstrous profit machines,” as Matt Taibbi said in Rolling Stone. But a recent Congressional order forcing the Fed to disclose at least a bit of its bailout dealings reveals how blatant the giveaway really was.

Here’s a sample from Mr. Taibbi’s article, “Why isn’t Wall Street in Jail?” ·

• Money for nothing.

Many of the banks that were recipients of Fed largesse took the money from their near-zero interest loans and bought Treasuries – essentially lending it right back to the government at 3% interest. ·

• Risk free investments.

The unique thing about TALF, the program to mop up Wall Street’s toxic loan mess, is the money got handed out in what are called ‘non-recourse’ loans. Hedge funds took out low-interest loans to buy up mountains of junk, which they turned over to the Fed as collateral. If the investments paid off, they got to keep every dime of profits. But if they failed? They just walk away, without recourse for the government – that is the taxpayers – who has to eat the losses. ·

• Foreign boondoggles.

Congress is finally looking into such things as “massive purchases of securities in … BMW, Volkswagen, Mitsubishi, and Nissan.” Mitsubishi and Toyota also got almost $5 billion in cheap loans, “at the same time taxpayers were being asked to bail out Chrysler and GM” – free money for the competition. ·

• Funding global competitors.

The Fed handed $9.6 billion over to Mexico’s central bank, and $2.2 billion to the Korea Development Bank “whose sole purpose is to promote development in South Korea.” ·

• Giving aid and comfort to the enemy.

The Fed gave loans of $35 billion “at interest rates as low as one quarter of one point” to a Bahrain bank in which Qaddafi’s Libya holds majority interest. And the Treasury exempted the bank from having its assets frozen by economic sanctions. ·

• Subsidizing tax dodgers.

“Hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands.” That’s right, bailouts for investment companies registered offshore to evade US taxes.

Taibbi has just scratched the surface. More horror stories are sure to follow as the investigation digs deeper. But chances are that after bleeding the US dry the guilty will just laugh all the way to their offshore banks.

But they can’t touch the wealth secured by gold and silver investment.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

But Robert B. Zoellick, president of the World Bank, said in no uncertain terms that “the United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency … there will increasingly be other options.”

There are big changes here at home, too. COMEX, the world's largest futures and commodities exchange, which until a short time ago accepted only U.S. treasuries and bonds as payment, now accepts gold in settlement of futures contracts. And many of America’s largest corporations – such as McDonald’s and Caterpillar - have found it easier to raise capital by issuing “dim-sum bonds,” securities denominated in Chinese renminbi rather than the dollar.

China and Russia have now agreed to eliminate the dollar from their trade. And long-time Middle East reporter Robert Fisk said that “Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including … a new, unified currency planned for nations in the Gulf Co-operation Council."

The loss of the dollar’s status as reserve currency will create “the biggest international monetary crisis the world has ever seen,” according to Brazilian economist and strategist Ricardo C. Amaral.

But what does Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility, have to say about the situation? “I'm really concerned. I think we face the most predictable economic crisis in history … This debt and these deficits that we are incurring on an annual basis are like a cancer and they are truly going to destroy this country from within … It may be two years, you know, maybe a little less, maybe a little more. But … the markets will absolutely devastate us.” That was his testimony to the Senate Budget Committee.

We better believe it, and protect ourselves with gold and silver investments before it’s too late.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

Nothing more aptly demonstrates that fact than last week’s budget squabble over totally inconsequential cuts that threatened to shut down the government. The real problem is debt service, and the tipping point where interest on our debt consumes 40% of revenues is fast approaching.

US debt assets have taken another huge hit from Pimco, the world’s largest bond fund manager. When the company unloaded 100% of its US debt in February, “holdings of U.S. government- related debt weighted by market value” dropped to zero says the Wall Street Journal. Now Pimco has gone one step further and is gobbling up shorts on the debt, betting on further price declines.

Falling price translates to higher yields – in other words, higher interest the Fed will have to pay on its debt. And higher Fed interest translates directly to higher interest on consumer and business borrowing, the last thing this economy needs.

All the talk about the debt so far has been nothing but political posturing. Obama excludes debt interest from his definition of a balanced budget. Democrats and Republicans alike are talking about trimming the budget with a scalpel while only “radical” tea partiers have picked up machetes. But that is what we need.

For one thing, politicians bandy about the official debt figure of $9.1 trillion. Granted that alone is cause for austerity. But Bill Gross, Pimco’s founder, is more “worried about the hefty portion of each year's budget that goes toward non-discretionary and entitlement spending.” Medicare, Medicaid, and Social Security obligations put the true US debt at $75 trillion, says Gross. "Unless entitlements are substantially reformed, I am confident that this country will default on its debt."

That should worry every one of us. Default would be the final step to complete devaluation of the dollar, leaving gold and silver coins as the only meaningful currency.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org

A good deal of the confusion nowadays comes from the illusion that asset classes across the board are on the rise. But that is hardly likely. If the Fed has succeeded at anything it is creating that illusion by devaluing the underlying support of the markets – the dollar. As long as the value of the dollar drops faster than everything else, even declining assets appear to be gaining.

The stock market provides the perfect illustration of what is happening. In a healthy economy rising stock prices reflect a growing asset base – companies enter the market, increasing competition for investor money and attracting new investment. But today’s prices are due only to a flood of new money. With the economy stalled there is no growth in the asset base and new investors are hard to come by as inflation has eroded the average American’s disposable income to zilch.

In the 1990s the stock market was expanding with an average of over 500 initial public offerings (IPO) each year. But that number plummeted over the last decade to just 130 according to the Wall Street Journal. Rather than own up to the failure in its policies, the government is pulling another trick from its sleeve.

A new SEC study has recommended changing the rules for private equity entrance into the market, sidestepping all of the protections for individual investors. “At a time when investors are seeking more market transparency, it would [not only] lessen the amount of publicly available data about those companies,” says the Wall Street Journal, it would also “shut out many ordinary investors from one of the fastest-growing market sectors.”

Shares in companies that make no demonstrable contribution to the economy could also artificially expand the asset base, extending the illusion that the economy is improving. But no structure, no matter how clever the design, can stand for long without a real foundation.

Throughout history paper assets have had their brief heyday and then disappeared. But gold and silver investments have proven time and again to be the one reliable store of value that transcends every political, social, and economic reversal.

Daily Updates Archive

Shannon King

Senior Staff Writer - GoldSilver.org