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- What Gold to Own With ETFs
- It’s Do or Die Week for Equities and Gold
- Donation button Live (L@@K to the right)
- Missing Indications in ZEAL Intelligence Newsletters
- FOFOA: More freegold fodder
- GET OUT!
- A Comeback for Gold-Backed Money?
- The Days of Gold-Plated Public Sector Pensions are Numbered
- Silver Toppings 2
- So When Do The Precious Metals Diverge?
- The Weimar hyperinflation - 1923 – Germany
- Sprott Money: The Price of Silver Could Explode
- Want TA on Silver/Gold? Here you go...TSI Trader explains it from 2004-present
- Playing Games with SILVER
| Posted: 13 Mar 2011 06:41 AM PDT Tom Lydon submits: Gold prices rose after the earthquake in Japan renewed interest in safe-haven investing of the metal and related-exchange traded funds (ETFs). Matt Whitaker for The Wall Street Journal reports the most actively traded contract for April delivery, rose $9.30, to settle at $1,421.80 a troy ounce. Investors have options for getting exposure to gold with ETFs. There are physically-backed ETFs, futures based and gold miner ETFs available. The largest gold ETF, SPDR Gold Shares (NYSEArca: GLD) has gained an average annualized 20%-plus in the past three years, reports Murray Coleman for Barrons. It buys bullion and physically stores gold for investors, tracking spot markets. In the same time period, Market Vectors Gold Miners (NYSEArca: GDX) is up 3.6%. This fund invests in the companies that search for and extract the gold from the ground. Basically it costs the same to pull gold out of the ground, no matter how much Complete Story » |
| It’s Do or Die Week for Equities and Gold Posted: 13 Mar 2011 05:55 AM PDT The past couple weeks have been choppy in the equities market. While the strong intraday moves are great for day traders, it is extremely difficult for swing/position traders who normally hold positions for 3-60 days in length, which is my focus with this newsletter. That being said, we are reaching a do or die point for the equities market and next week there should be a strong move out of this trading range. On the volume side of things, we have been seeing distribution taking place. Heavy volume continues to step into the market unloading large amounts of shares. The interesting part is that the majority of traders are bullish and sentiment levels are at extremes. Also, we are seeing the retail trader enter the market… What does this mean? It means we must trade very cautious and large positions on the long side shouldn't be taken. The selling volume and extreme bullish sentiment are warning us that a correction is near. There are a few things I watch to identifying trend reversals and they are accumulation or distribution of shares, Extreme sentiment readings, Market internals/breadth, and if the price relative to the 20 SMA. Currently we are seeing all the signs of a reversal to the down side, but it has yet to be confirmed. My trading buddy JW Jones who focuses strictly on Options Trading has been cleaning up with the current volatility making 21%, 50% and 67% returns on his last three trades. This guy loves volatility and always seems to put together an option play with very little risk yet big upside potential. Let's take a look at a couple charts… SP500 60 minute chart going back 2 months This chart shows a possible trend reversal unfolding. We are seeing distribution selling, lower prices with the current price trading under a key resistance level. Also my internal/sentiment indicators are showing waves of buying/bullish market action which is quickly met with strong selling pulling prices back down. Trading during trend reversals is difficult because the potential downside risk is higher when entering a position. If traded, only small positions should be taken until a trend is established, then you can build/add to your position on pullbacks or bounces depending on the direction in your favor. My current bias is for lower prices in the coming days, but until we break above February's high or Last week's low with strong volume it's a little more of a guessing game. If we see the SP500 rise early next week and fill the gap and the market internal indicators show extreme short term overbought conditions, it will make for another great low risk shorting opportunity. Shorting just under a key resistance level means the protective stop is only 1-2% away from our entry point and makes for a solid 1:3 risk/reward ratio. On the flip side, if the market has a strong rally and closes above the key resistance level then the tables will have turned and a new up trend should start.  Gold 60 Minute Chart going back 2 months Weekend Trend Analysis:
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| Donation button Live (L@@K to the right) Posted: 13 Mar 2011 04:38 AM PDT After spending countless hours a day on here helping people try to make some fiat cash and turn it into bullion, I have finally set up a donation button as the adsense revenue is mediocre at best. Many people have been requesting this, so here it is. If I have helped you in any way, feel free to dish out some fiat, eventually it will be deemed worthless anyway, so you might as well give it to |
| Missing Indications in ZEAL Intelligence Newsletters Posted: 13 Mar 2011 04:16 AM PDT I hope someone familiar with the ZEAL Intelligence Newsletters could give me a help: Recently I ordered this Newsletter, but I can't find the indications in it concerning Stop Price Level and Trailing Stop Percentage. According to the ZEAL tutorial "Stop Loss Trading 101", these indications should be in the trade-list in page 7 (for new trade recommendations and as well for the open trades). Unfortunately, I do not see any. I asked ZEAL Research, but got no answer. Thanks in advance for any hint. |
| Posted: 13 Mar 2011 01:38 AM PST Many tidbits of wisdom to be found here: Snip: "If you hand me silver or gold, I won't care whether the symbols impressed on it are from a reliable government, an unreliable one, or a defunct one. But if you hand me paper, I'd better be firmly assured the issuer will live long enough (and be inclined) to pay off this debt to me. Even if you hand me a paper claim ticket to silver or gold stored in a vault somewhere, I'd better be firmly assured the vault keeper is of a mind to let me take possession of that metal without the slightest hesitation. Another and FOA, by saying wise people should avoid paper and only hold physical, are indicating that they expect the LBMA and Comex Gold Contract documents will go the way of the Confederate Dollar (or maybe more appropriately, the way of the pre-1933 paper dollar: "Yes, a dollar is still a dollar, we just won't live up to it in quite the way we used to."). At the very least, they're saying the risk of such a systemic change is so substantial that one should not be standing too near the fault line should the quake come sooner than predicted. What the both of them are describing is an official Spot POG (and its kindred future months' POGs) which may well plummet to $200 or even, as Another allowed some time ago, perhaps $10. Realise, though, that Another is by no means predicting that Michael will be able to profitably sell Krugerrands at $10 each. Far from it. What Another and FOA are anticipating is a situation much like the paper money situation in both the USA and the CSA in 1864: how likely is it that the paper contract you're handing me today will be redeemable for any amount of gold by this time next year? Tell you what, I've got a spare ten bob I feel no desperate attachment to. I'll buy your one-ounce IOU just for kicks. If LBMA completely expires, I'm out only a small amount. If LBMA unaccountably fails to expire, I've struck it rich. Of course, I may still not receive a physical ounce of gold on settlement day. I may find I've become the proud owner of a 1/400th part of a London Good Delivery bar, which I'm then told may not be removed from the vault. If I'm lucky, I might be able to sell my claim ticket for some amount of whatever paper currency is still worth accepting. Meanwhile, those of us with less of a gambling inclination will sleep more soundly holding physical. After all, a silver or gold coin firmly in your possession remains silver or gold even after its issuer expires." Read the rest at http://fofoa.blogspot.com/2011/03/mo...ld-fodder.html Enjoy/fyi, R.:shine: |
| Posted: 13 Mar 2011 12:45 AM PST This is for all you folks out there with retirement accounts in the general stock market. I've been warning for many months that the cyclical bull we've been in for almost two years is still just a counter trend rally in an ongoing secular bear market. I made that same warning about the last cyclical bull market from `02 to `07. Many people ignored me in November `07 when I said the second leg down in the secular bear had begun. I suspect many people wish they hadn't. There are now warning signs that this counter trend rally may have topped, and even if it hasn't the potential upside is so small that it's not worth the risk of getting caught in the next bear leg to catch a few more percentage points. As of Thursday and Friday the stock market has now broken below the prior daily cycle low. When a daily cycle low gets violated it invariably signals the start of an intermediate degree correction.  The warning bells are going off not so much because an intermediate degree correction has begun, those happen like clock work about every 20-25 weeks, but because of how quickly this daily cycle has topped. In only three days. That means we are now locked in an extremely left translated daily cycle. It is those extreme left translated cycles that do the most damage. The daily cycle following the flash crash last year was a left translated cycle that topped in only 4 days. We all know what that led to. The bigger picture is the intermediate cycle. Notice the market is now on week 16 of the current intermediate cycle. I noted earlier that an intermediate cycle low is due about every 20 to 25 weeks. On an intermediate term basis the market is now due to move down into that major cycle low. The next larger cyclical structure is the yearly cycle. That is also due to bottom with this daily and intermediate cycle. The combination of all three cycle durations bottoming at the same time will almost always produce a very severe correction. Because of how the dollar cycle is unfolding (available to premium subscribers) I expect the stock market cycles to bottom pretty close to the 1 year anniversary of the flash crash.  And unfortunately Bernanke is not going to be able to just crank up the printing presses and rescue the markets like he did last summer. The problem isn't that there is a shortage of liquidity. The problem is that there is too much liquidity. It is causing commodity prices to surge out of control. Oil is back over $100 despite continued high unemployment and impaired demand. Food prices are going through the roof and have already trigger social revolt throughout the mid east and most emerging markets. Once the next leg down in the dollar crisis gets underway it won't be long before we here in the US will be looking at $4.00 or $5.00 for a gallon of gasoline. As the dollar crisis intensifies Bernanke will be forced to end QE or risk breaking not only the currency but also the bond market. Without an endless supply of fresh money the markets and economy will quickly start to collapse. We saw this last summer when QE1 ended. The same thing will happen this time only Bernanke's hands will be tied by the dollar crisis and surging commodity inflation. He will be powerless to prevent the return of the secular bear forces. Well unless he's prepared to risk hyper inflation that is. Personally I don't think Ben is willing to completely destroy the dollar and crash the bond market just yet. I suspect when he finally realizes that Keynesian economic principles have led us down a path of no return he will resign and someone else will put the finishing touches on his master piece. The only question is whether those finishing touches will be to allow the deflationary depression that is required to cleanse 5 decades of debt from the system or whether we will choose the hyper-inflationary path to service the debt spiral we've gotten ourselves into. In any case it is time to exit all general stock market funds and position oneself in cash to ride out the next leg down in the secular bear market. If one has a gold or precious metal fund available in their IRA we should have about two months left of spectacular gains as the parabolic finale unfolds in the gold and silver markets. But once that has run it's course even those positions will need to be exited as there is no real way to diversify against another severe bear leg down. The simple fact is that in a severe bear market everything gets taken down to some extent. Gold will hold up much better than practically all other assets but even gold will take a 20-30% hit during a D-wave correction. And all parabolic C-wave finales are invariably followed by an severe regression to the mean profit taking event. Unless one has the option of a gold fund, it's now time to get out of general stock funds and move IRA's to a money market fund until the next four year cycle low is reached (probably in late 2012).        This posting includes an audio/video/photo media file: Download Now |
| A Comeback for Gold-Backed Money? Posted: 12 Mar 2011 10:32 PM PST |
| The Days of Gold-Plated Public Sector Pensions are Numbered Posted: 12 Mar 2011 10:11 PM PST |
| Posted: 12 Mar 2011 10:04 PM PST
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| So When Do The Precious Metals Diverge? Posted: 12 Mar 2011 09:42 PM PST No one is so smart that they can measure with accuracy when credit breaks-up or exactly when the Federal Reserve and other central bankers lose control. It seems that each of the popular, in the news countries we discuss have some kind of Black Swan lurking and ready to wreak havoc. It could be China's real estate market, Japan's credit market or something within Western or Eastern Europe. It could be food rationing, earthquakes, or a roiled energy market or, a catastrophic credit market failure in America. It could be violence against world leaders or, even a false report on the markets.
Remember the USA Flash Crash? Just this week the Aussie stock exchange closed for a glitch. It could be Saudi Arabia going upside down with problems similar to Egypt. In any event, so much of the world is held together with chewing gum and bailing wire that the smart ones are personally preparing to deal with it. Most understand that when a severe crisis hits you get no institutional help…they only get in the way for public relations reasons. Some Key Events That Signal Precious Metals Could Diverge.
Our key discussion point in this report is to encourage traders, readers and investors to understand there is no returning to the olden days of Ozzie & Harriett and the 1950's. The New Abnormal is inflation to hyperinflation moving toward destruction of the US Dollar. It appears we are mostly safe until May or June when the "Sell In May And Go Away" bell rings. The US National Budget will not be fixed and the GOP's have no prayer of cutting any programs dramatically. They are making lots of dust and news, but to no avail. The government will not be shut down and politics gets more rough and nasty as the budget fights spill over into the states. Traders And Investors Should Expect The Following: The new USA budget will be another smoke and mirrors non-budget; solving nothing significant. The Federal Reserve will continue to print and pour in more paper, finishing QE2 at the end of March and beginning QE3 for the second quarter. In summer, we get QE 4. Numbers 3 and 4 will not be announced they just do it. US inflation is now running over +20% for food and energy and rising faster. Other stuff is deflating or beginning to see price increases starting inflation in other sectors. The definition of Hyperinflation is inflation running at an annualized rate above +50%. The USA dollar either fails and is replaced or, cut in half on value from index 80.00. USA food-makers and restaurants are struggling with higher prices. Big chain grocery stores are trying to hold the line but their margins are already razor thin. Marginal food stores and small retailers will fail in droves. American farmers are going full-out to plant fence-to-fence as grain prices skyrocket. One top analyst said that if the corn crop falters this summer for any reason we are in big trouble. Reserves are the lowest since 1974, yet the government is demanding more corn for ethanol. The last ethanol corn number we saw was 5 Million bushels for fuel that is essentially not economically viable. This is for the greenies and tree-huggers to get votes. China has 35% inflation (non-announced) with real estate prices totally out of control. A top analyst wrote the real estate bubble is separate from the other stuff. We see a blend of slower (other stuff inflation moving into real inflation). China has hard food shortages and they will be buying lots of grain on the world markets especially soybeans from the USA. Major freezing-drought has killed over 30% of their grain and the government is now spending $75 Billion on domestic police security equal to their national defense budget. This means they expect riots and violence over these food problems, jobs, payroll, inflation and general shortages. Basic ores like iron, zinc, manganese, copper and others see prices rise on China demand and new inflation. A new report says iron ore is going up +20% right now. Recently, copper was near $4.60 a pound; over $10,000-ton. Most markets seem bullish until later spring. After this we are very wary, expecting a flat summer with increasing volatility beginning in later August. This fall could be very traumatic. Inflation will be quite difficult. Crude oil and other products are now firm with higher supports and prices. On this Friday morning of 3-4-11, crude oil futures are 103.20 with highs over 103.57. Watch for 108 next higher resistance followed by $112-115. Natural gas is plentiful and prices should stay low until the summer air conditioning season when power plants ramp-up the juice to run all the A/C demand. Jet-A and diesel prices are rising. The airlines must install fuel surcharges on tickets and truckers have to raise transport prices again. This means that everything riding on a truck costs more, especially food. Mexico suffered a hard freeze a few weeks ago from the USA border all the way to their southern border near Guatemala. Since they provide 50% of USA national demand for fruits and vegetables, those products in USA stores will encounter shortages and prices could double. The newer crop is planted next month in April and will not be ready for shipment until later May or June. Meanwhile, a large production-USA delivery hole exists. The Middle Eastern crisis will spread. Iran is fomenting trouble in most all nations now in an uproar with riots, joblessness and inflation. The Saudi's are throwing billions at their Sheeple to quiet their herd and so far it's working. However, Iran and their bad-boy friends are going to "seize the moment" to gain political footholds where they have not been before. These troubles in the Middle East will spread and give the global central bankers an opportunity to save their failing selves by starting a new World War III with Iran. We forecast Iran will be attacked by outsiders in 2012 or 2013. Sadly, this could be the mother of all wars involving most major nations in the fight for energy.         This posting includes an audio/video/photo media file: Download Now |
| The Weimar hyperinflation - 1923 – Germany Posted: 12 Mar 2011 04:45 PM PST Bullion Vault |
| Sprott Money: The Price of Silver Could Explode Posted: 12 Mar 2011 12:03 PM PST Sprott Money: The Price of Silver Could Explode | by: The Gold Report March 12, 2011 |   Sprott Money executives Eric Sprott (chairman) and Larisa Sprott (president), sing the praises of the "poor man's gold" in this exclusive interview with The Gold Report. "All the data supports the thesis that silver is undervalued," says Eric—who serves as chairman of Sprott Inc., as well as CEO, CIO and senior portfolio manager of Sprott Asset Management LP. "We'll certainly see a three-digit price," he adds. Larisa explains how the company's business model differs from others in the space and reveals plans to open Sprott Money USA within the year. The Gold Report: Your Markets at a Glance commentary last November said it seemed unlikely that silver would stay under $30 for long. Four months later, the spot price is about $35. Are you surprised by how quickly your prediction came true? Eric Sprott: Not really. Based on fundamental evidence, technical evidence and other things going on in the markets, I thought silver would be explosive this year. I've probably fallen a little short of my targets, but I think it's going higher. Silver doesn't have to hit $50 for everyone who's involved with it to make outsized returns, but I thought it could reach $50 within the first half of this year. All the data supports the thesis that silver is undervalued. TGR: Are you seeing $50 as a top price, or a new baseline? ES: Lots of things may happen in the short term that have no bearing on the long term. Silver now trades at a price ratio of about 40:1 to gold. In other words, it takes 40 ounces of silver price to equal one ounce of gold. The historical ratio is more like 16:1. My view is that we will go back to 16:1 within two to five years. To put that in perspective, a $1,600 gold price would imply $100 for silver. I happen to believe that gold will go much higher than $1,600; therefore, given time and letting this ratio play out, I think we'll certainly see a three-digit price for silver. TGR: So, $50 may even become the floor. ES: It's a step on the way. It may come faster or it may take a little longer; but when it happens, silver will outperform gold 3:1. That's a shockingly large difference and good reason to get a little more involved in silver. TGR: You've said that silver will be this decade's gold. ES: We assembled the gold articles we wrote over the last decade into a compendium called Gold the Investment of the Decade and these are also archived and available on our website. Now that we're in the second year of another decade, I'd say silver will be the investment of this decade. Gold essentially blew everything away in the last decade. There was no contest whatsoever with any currency or stock market. I think we'll all look back 10 years from now and say silver was the investment of this decade, because it might triple the performance of gold—and I think gold will continue to outperform all other currencies and stock markets. So I think silver's really an area where people should focus very heavily. TGR: This performance you're describing can't be based primarily on manufacturing demand. How much do you anticipate in the way of investment demand? ES: There are two parts to the silver story. One is industrial demand and one is investment demand. Industrial demand has been quite strong, but the thing that's been very unusual in the last year or two has been the marked increase in investment demand. There are many ways of viewing investment demand, and it's obvious we're going to experience some serious growth here. Judging from the data points that we look at, and as Larisa would mention, when we look at our sales of gold and silver bullion, we're actually selling about five times more dollars of silver than we are dollars of gold. That means we're selling 200 times more silver bullion than gold bullion. The U.S. Mint is selling as many dollars of silver coins as dollars of gold coins. GoldMoney.com, an online precious metals bank, also has sales of silver and gold that are about equal. I want to emphasize that we're dealing with the flow of money here. The price difference is 40:1; but with that kind of money flowing into this commodity versus that commodity, you also have to look at the availability of one versus the other. In this case, believe it or not, that's 1:87—there's $1 of silver available in the world for every $87 worth of gold. The number of coins is explosively larger than the dollar figure. Something has to give when you have the same amount of money going into two products that are priced 40:1. TGR: Perhaps Larisa could tell us a little bit about what's happening with Sprott Money, including a comparison to other precious metal investment alternatives. Larisa Sprott: Sprott Money buys and sells gold and silver bullion, which includes coins, bars and wafers. We either physically deliver it or store it. Our storage depository is located in the State of Delaware. Within the next 6–12 months, we will be opening a facility in Canada. Precious metal investment alternatives include exchange traded funds (ETFs), certificates and trusts; for instance, iShares is listed on an exchange—you get a piece of paper saying you own the commodity, but you don't have access to it. As my father mentioned, GoldMoney offers gold holdings, whereas Sprott Money allows you product choice and physical delivery of the gold and silver. TGR: If you choose to have it delivered. LS: I'd venture to say that 90% of our clients have their gold and silver delivered to them. They store it in a bank vault or at home—they have the peace of mind of knowing where it is. And 10% of our clients choose to store it in our depository. TGR: And you're thinking about adding a storage facility in Canada, so there would be a choice? LS: There's been huge demand from both Canadian and American clients to store in Canada. The impression I get is that they fear that what happened back in 1933, when the U.S. government seized the gold in people's safe deposit boxes, could happen again. So, clients might feel safer or more confident storing in Canada. TGR: Would an additional value to an American investor storing bullion in Canada be the ability to convert it into Canadian dollars? LS: Yes, and that's a good point. Anything we sell to clients, we will buy back. ES: We can deal in either Canadian or U.S. currency. TGR: At this point, are your customers Americans or Canadians primarily? LS: About 70% Canadian, 30% American. That's a good segue actually, because in the next six months, we're going to open Sprott Money USA with an office in New York City to break into the U.S. market a bit more. TGR: Regardless of where these metals are stored, the common view is to hold them in your portfolio as insurance against economic or currency crisis. Eric, you've recommended that Sprott clients hold 60%–70% of their net worth in precious metals, whether in vehicles such as Sprott Money or another. Because that proportion seems higher than what's appropriate for insurance purposes, to what extent do you look at precious metals as investments versus insurance? ES: It's a bit of a semantic argument in a way, but I guess I would start with the view that I have a large distrust of the financial system. I really worry that we could have some kind of collapse. It sounds extreme to say, but we nearly had one in '08 and we nearly had one Europe last year. We still live in a very over-levered financial system. The banking issues just don't seem to go away. We bail out Iceland or Ireland or Greece, and now we've got to bail out Egypt or Tunisia or wherever else is going to have some fiscal difficulties. Ultimately, I just don't think there's enough tangible support for these systems when people want to extricate themselves and take their money out of the banks. Unfortunately, bankers can't get rid of the asset on the other side of their balance sheet. So I think people will realize sooner or later that having their assets in physical metal is better than a bank deposit. I say that on a universal basis. To get back to whether it's insurance or an investment, I certainly can look at it as insurance because it's the one asset that should maintain its purchasing power. In some kind of financial collapse, all assets other than real assets will go down in value, so in that sense it's insurance. It's also relatively proven to be an aggressive investment. Gold's gone up for 11 years; I think it's 17% a year and silver's gone up even more. I think it's all due to the debasement of the currencies and it's relative to the currencies. So I think it's both. I don't have any trouble investing on behalf of our clients to the tune of 70% to 80% in precious metals. We've had a very high weighting in those areas for a long time. Of course, it has been the right place to be—and I think it will continue to be the right place to be. TGR: The silver market is so small it lends itself to being held down artificially. What measures might free up the market movement? ES: As you probably know, all sort of lawsuits accused HSBC (HBC) and JP Morgan (JPM) of manipulating the price of silver in 2008 when it went down. In that situation, quite frankly, I was the most surprised and disappointed person in the world to see that in the middle of a financial collapse, the price of silver—and even gold—didn't rally. It seemed so unlikely that that should've happened. In my mind, that consequentially suggested forces might have been at work that weren't normal in those markets. But the manipulation will end, if there was manipulation. I'll explain why. On commodity exchanges, the majority of transactions never settle in physical delivery. Just as an example, of the 800 million ounces (Moz.) of silver produced in a year, there are days when the commodities markets will trade 500 Moz. Well, obviously, nobody is settling this stuff because you can't have an 800 Moz. annual market and trade 500 Moz./day. These are just people pressing buttons on computers—you know with their algorithms or whatever—but they're not taking physical delivery. Manipulation takes place when a person who has more money than another person can drive the price of a product up or down, and it's easy to manipulate a market wherein all you need is fiat currency. Manipulation will end when enough people say, "You know what? I'll take delivery of that product." I think that's what's happening in silver. More and more people are taking delivery. The dealers who are short something like 400–500 Moz. have like 42 Moz. in storage. Our organization alone owns more than 42 million ounces. That's not a lot of silver to cover a short bet of 400–500 million ounces. With every delivery period, those inventories keep going down. They're going to go down to the point where everyone realizes there is no silver left. As a matter of fact, for all intents and purposes, I think there might be no silver available today, as some mints are no longer taking silver coin orders because they just can't provide them. So, it's obvious to me that this supposed silver inventory doesn't exist anymore and that ends the manipulation. LS: Speaking of inventories, I'd like to rewind a bit and make a point. There are so many competitors out there, but what sets Sprott Money apart from all of them is that our business model is a lot different in that we don't sell what we don't have in stock. I've heard stories from clients who say they've placed orders with our competitors and had to wait six months for delivery. Sprott Money has reserves and a lot in stock. TGR: Currently, the aboveground silver remaining is somewhere around one billion ounces. At $35/oz., that's $35 billion for the entire sector—and seven entities hold 50% of it at this time. That seems so concentrated that these entities could manipulate the price, as the Hunt Brothers did back in the '70s. ES: Most of those entities represent an agglomeration of individuals' interests; for example, I don't know how many accounts GoldMoney has, but it would all be in individual accounts. In the case of our Silver Trust, Sprott Physical Silver Trust (NYSE: PSLV), it's whatever money we can raise from various sources that enable us to go and buy the 22 Moz. we bought. I don't know how many shareholders it has, but it trades millions and millions and millions of shares a day. So, really none of these entities are organizations doing anything—they are groups of investors acting through various vehicles. I don't think anybody's tried to corner the market here. TGR: So, we have far more investors in the silver sector than in previous decades. ES: Absolutely. I think the phrase that probably captures silver's behavior, to which it's always been referred, is "poor man's gold." I think those who haven't bought gold are, to some extent, seeking refuge in silver. But anybody who's been a student of the silver market, as I myself might qualify, realizes we have a very tight situation here. And as this momentum builds to participate in the silver market, the shorts are just going to get overrun and the price could get excessively explosive. TGR: Explosive silver prices could bode well for companies in that space, too. Could we segue to the participation in the silver market through equities, mining companies that have silver assets? ES: We do own a lot of silver shares, as well as gold mining shares. We must own 40 or so different silver stocks. For the purpose of this discussion, I'll focus in on bigger vehicles available to the public at large. They're way more liquid and we don't have a strategic position in them. Relative to gold, there aren't a lot of silver vehicles, but we continue to like stocks, such as Silver Wheaton Corp. (NYSE:SLW), First Majestic Silver Corp. (NYSE:AG) and Hecla Mining Co. (NYSE:HL). On a little lesser scale, Bear Creek Mining Corp. (BCEKF.PK) and on a really lesser scale is Aurcana Corporation. With some of the smaller companies, we have strategic positions like 10% or 20% and I don't want to be pushing our own book here. TGR: Most of the stocks you mentioned have assets located in either Mexico or Idaho—areas where Sprott portfolio managers seem comfortable in terms of the companies' ability to continue growing and performing. ES: There's no doubt about a comfort level with operations in North or Central America, but we also have investments in Peru—where Bear Creek Mining is focused—and Argentina. We have no particular issues with those areas. The market, of course, always discounts whatever country it is—whether it be China, Russia, Kurdistan, the Congo or wherever—based on the political risk there. Typically, it's built into the stock price and sometimes at a deeper discount than the situation warrants. As a result, some opportunities to make investments in places away from North and Central America can pay off. TGR: Suppose an investor wants to take $100,000 from his nest egg and put it into precious metals because he's nervous about currency markets. Would you recommend putting 70%–80% of that into bullion and the other 20%–25% in mining equities? Or, would you suggest diversifying outside of the precious metals arena? ES: Just to clarify, I'm not recommending that people have 80% of their money in physical (though I can tell you I don't see any problem with that). When I say we have 80% invested in PMs, the physical component is 30%–35% and the stock component 45%–50%. That's the way we have played it. As a portfolio manager, of course we want to get a little more action out of the shares than we can get out of precious metals because of the leverage factor. I'm personally invested at that rate, I invest for clients at that rate and I think it's the wise thing to do. I'm not a great believer in diversification for the sake of diversification. Make a stand on what you believe is going to happen and participate in it. Just trust that you're going to be right. If you're going to be right, you'll get an outsized return. So, that's our call and we're sticking with it. It's proven very rewarding over the last decade. And of course, it's been very rewarding to be in silver in this decade—it's been phenomenal. Maybe I should've had 100% of my money in silver. TGR: Given that silver's the play of the decade, is your organization shifting from gold equities into silver equities more heavily? ES: Since the end of '08, I've been selling gold bullion. Initially, it was to buy gold shares because the gold shares got absolutely massacred in '08. As the year wore on and into 2010, I got more and more fascinated by silver equities, so I've also been selling gold bullion to buy silver equities. I haven't yet sold silver bullion to buy silver equities, which may be the next thing I do—again, because the equities are a little more levered. Obviously, silver on its own has had superior performance, particularly in the last nine months. It's been a phenomenal performer. Mind you, the silver stocks have way outperformed it, so we'll see going forward. TGR: It's great to understand your rationale. Thank both of you so much for your time and insights. Eric Sprott is chairman of Sprott Inc., CEO, CIO and senior portfolio manager of Sprott Asset Management LP and chairman of Sprott Money Ltd. He has accumulated more than 40 years of experience in the investment industry. After earning his designation as a chartered accountant, he entered the investment industry as a research analyst at Merrill Lynch. In 1981, he founded Sprott Securities. After establishing Sprott Asset Management Inc. as a separate entity in December 2001, Eric divested his entire ownership of Sprott Securities to its employees. Eric has been stunningly accurate in his predictions, including foreseeing the current financial crisis. He chronicled the dangers of excessive leverage and the bubbles the Fed was creating, while correctly forecasting the tragic collapse of the housing and financial markets in 2008. Eric's predictions on the state of the North American financial markets, as well as macroeconomic analysis have been presented in Markets at a Glance, a monthly investment strategy newsletter. Larisa Sprott joined Sprott Money Ltd. in the role of president in December 2009. As one of Canada's largest owners of gold and silver bullion, the company's goal is to facilitate ownership of precious metals to the general public. Larisa has more than 15 years of experience in the financial industry, having worked at Sprott Securities Inc. (now Cormark Securities) first as an office administrator in the Vancouver office, followed by roles in both research and corporate finance at Toronto headquarters. Larisa then spent five years with Sprott Asset Management in the capacity of client services, sales and marketing. In November 2007, she became an investment advisor responsible for servicing and managing high net-worth clients. Disclosure: 1) Karen Roche and Sally Lowder of The Gold Report conducted this interview. They personally and/or their families own the following companies mentioned in this interview: None. 2) The following company mentioned in the interview is a sponsor of The Gold Report: None. 3) Eric Sprott: I personally and/or my family own shares of the following companies mentioned in this interview: Sprott Physical Silver Trust. I personally and/or my family am paid by the following companies mentioned in this interview: None. 4) Larisa Sprott: I personally and/or my family own shares of the following companies mentioned in this interview: Sprott Physical Silver Trust. I personally and/or my family am paid by the following companies mentioned in this interview: None. http://seekingalpha.com/article/2579...e?source=yahoo |
| Want TA on Silver/Gold? Here you go...TSI Trader explains it from 2004-present Posted: 12 Mar 2011 09:33 AM PST Gold and Silver Parabolics - Part II The TSI Trader Blog * As you will discover from the charts and information in this article, the previous three gold and silver parabolics (2004, 2006 and 2008) had a common characteristic. Each exhibited a midpoint consolidation - a resting place that separated the character of the first half and second half of the parabolic move. This observation is |
| Posted: 12 Mar 2011 08:55 AM PST Today marks the expiration date on the March Silver Option. In what has become a sick industry joke, silver magically lost a few bucks per ounce. As I reported months ago, JP Morgan was outed for manipulating the silver market through the use of Silver Put Options. Industry insiders learned that, almost like clockwork, a flood of Put Options would drive the silver price down near the Silver Option expiration date of each and every month. I expect silver to continue its upward rise the remainder of the month. Shrewd investors would buy Puts alongside JP Morgan and benefit from a windfall that came at the expense of those holding Call Options. For the unitiated, a Put Option is a bet that the price of silver will go down. A Call Option is a bet that the silver option will go up. JP Morgan, a Rothschild/Rockefeller concern and a beneficial owner of the private corporation that prints our money, the Federal Reserve, has a vested interest in maintaining the illusion of financial stability. Therefore, they stand accused of manufacturing multiple silver options for every real ounce of silver that exists. In fact, it is estimated that 100 imaginary paper ounces exist for every real ounce of silver bullion. When all that paper falls out, which it will, silver will be worth 100 times its current value. Options are based on commodity contracts. A commodity contract is sold by silver mines, and others, in order to get a fixed price on silver coming into production in the near future. When they expire, the holder of the contract takes physical delivery of the silver. Apparently, they can also be settled in cash when the silver is "unavailable". My sources are telling me there are a whole bunch of silver commodities contracts being settled for cash instead of delivering the physical silver. One individual claims they received 50% more cash than the silver was worth! Comex, which manages these transactions has been in trouble with charges of fraud before: "As of 2009, holders of COMEX gold futures contracts have experienced problems taking delivery of their metal. Along with chronic delivery delays, some investors have received delivery of bars not matching their contract in serial number and weight. The delays cannot be easily explained by slow warehouse movements, as the daily reports of these movements show little activity. Because of these problems, there are concerns that COMEX may not have the gold inventory to back its existing warehouse receipts. As a result of the CFTC's March 2010 Metals Hearings, position limits will likely be imposed on Comex Precious Metals Futures Contracts, according to CFTC Commissioner Bart Chilton, in order to avoid continued charges of unfair concentration and manipulation." (Sources) Last year, the CFTC Commissioner issued the following statement on silver manipulation: On October 26, 2010, as everyone that follows PM markets knows by now, CFTC Commissioner Bart Chilton released the following statement (see Mr. Chilton's full statement here): "I take this opportunity to comment on the precious metals markets and in particular the silver markets. More than two years ago the agency began an investigation into silver markets. I have been urging the agency to say something on the matter for months. The public deserves some answers to their concerns that silver markets are being, and have been, manipulated." "The legal definition of manipulation under the law is a high bar to prove. It is a much different test than what the average person might consider as manipulation. Under existing law, to prove manipulation, the government is required to demonstrate not only specific intent; we also need to prove that as a result of the intent and market control, that activity caused an artificial price — a point that can certainly be debated by economists. Attempted manipulation is less difficult to prove — requiring an intent to manipulate and some overt act in furtherance of that intent. There are also other violations of law that could contort markets and distort prices." "I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act have taken place in silver markets and that any such violation of the law in this regard should be prosecuted." (Source) Stating the obvious. Look for silver to hit $60 per ounce by May and $100 by mid-summer. Supplies are diminishing most dealers but, not for me. You can still expect delivery in a few days, or 2 weeks, depending on the order size. http://www.moneyteachers.org/Silver+Games.htm |
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