Tuesday, June 14, 2011

High gear no volume summer in full swing

If you havent noticed the markets are now trading on low volume. You will get whipped around, tossed in the corner and your mind will blow up if you try to trade this garbage.

Patience is the key. The great crash is coming by the fall. Be ready flush with cash to buy it (phyzz) and anything else you think is 'oversold.'

Silver chart is wedging. Next few days should determine if it keeps within the lines.

Comex reg is still at 28.697. Good for you Blythe, good for you.

I am trading lightly and with less shares. You have been warned.

And if anyone is wondering if the Wolf Blitzer campaign is off with tainting the Goyim with big brother AIPAC info, here it is. God Bless AmeriKa.



    In post or two ago, I noticed some bloggers mention that the manipulation on the comex could co on forever. Furthermore, someone else wrote of how DEFLATION was inevitable. I would like to spend a few words on that...but first:

    OC15....I do not have a website, and I would not use SGS's blog to promote mine if I had one. SGS is doing us all a service by educating the precious metal investors through his Bear cartoons and this blog about what is happening on the INSIDE so to speak.

    That being said...I enjoy doing research, and plan on writing several articles on the falling EROI - energy returned on invested and how it will affect silver mining, and the economy in general. Hopefully I will get them on Zero Hedge.

    I use SGS's blog to add interesting information to help the silver investor realize the FUNDAMENTALS rather than worthless manipulated Technical Analysis that the big bullion banks like JP MORGAN are using to paint the charts. The very same charts silver and gold analysts use to forecast where silver is heading.


    We use a lot of terms and lingo here that we take for grant it that everyone knows. I would like to reintroduce some information on Fiat Money for those who think DEFLATION is in the cards.

    For DEFLATION to be an outcome, the currency has to be a strong one. The US DOLLAR does not fit that bill. It has lost 98.6% of its purchasing power since 1913....and that figure may be outdated as well.

    FIAT MONEY is not redeemable. The Fed as of 2001, has forfitted the public the ability to redeem the FEDERAL RESERVE NOTE. This means...its worthless except for paying for all debts public and private.

    Back in the day, we had silver and gold certificates. You could take your silver certificate to the bank and REDEEM it for actual silver coin.

    For the sake of argument everything I mention will be PAID OFF in full. Think about this for a minute. A DEED to a house is a redeemable paper instrument. A TITLE to your car or boat is a redeemable paper instrument. Just like the old gold and silver certificates...which were REDEEMABLE for actual coin.

    If I had a DEED to my home, I could give sign it over to someone else and they would give me gold coin, silver coin, cash or something else of value.

    Now...if I took a MORTGAGE of my house and wanted to REDEEM it to someone else for something of value...they would look at me like I was crazy. A mortgage on a house or a note on ones car or boat are DEBT paper instruments that are not REDEEMABLE. This is the exact some thing as a FEDERAL RESERVE NOTE....hence the word NOTE at the end.

    A FEDERAL RESERVE NOTE is a debt instrument that has no REDEEMABLE quality to it. There has been two other times in the US history that we had Fiat money...or forced tender:

    1) Continentals - during the revolutionary war

    2) Green Backds- during the Civil War.

    Both became worthless after each war had ended....whereas gold and silver were still money.

    The FEDERAL RESERVE NOTE is backed by increasing worthless Mortgage backed securities, lousy agency debt and others totaling $14.3 Trillion dollars.

    We cannot have DEFLATION with FIAT MONEY. It is impossible. Its like have bible study with a prostitute.

    Furthermore, for those who think the MANIPULATION of the COMEX by the big bullion banks can continue.....remember...all FIAT MONEY becomes worthless...and there is only 27.6 million ounces of Registered Silver in the Comex...this amounts to a little more than 5,000 contracts. The Commercials hold over 78,000 contracts or 390 million ounces.

    This will all END BADLY.

  2. Excellent post SRS, I always enjoy listening to what you have to say

  3. Very good reading, thank you SRSrocco.

  4. I'll add some quotes that I've picked up from my historical reading of money. Check out these first two especially (Lenin and Keynes):

    Hundreds of thousands of rouble notes are being issued daily by our treasury. This is done, not in order to fill the coffers of the State with practically worthless paper, but with the deliberate intention of destroying the value of money as a means of payment. There is no justification for the existence of money in the Bolshevik state, where the necessities of life shall be paid for by work alone.
    Experience has taught us it is impossible to root out the evils of capitalism merely by confiscation and expropriation, for however ruthlessly such measures may be applied, astute speculators and obstinate survivors of the capitalist classes will always manage to evade them and continue to corrupt the life of the community. The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort.
    Already even a hundred-rouble note is almost valueless in Russia. Soon even the simplest peasant will realise that it is only a scrap of paper, not worth more than the rags from which it is manufactured. Men will cease to covet and hoard it so soon as they discover it will not buy anything, and the great illusion of the value and power of money, on which the capitalist state is based will have been definitely destroyed.

    ~ Vladimir Lenin

    Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
    Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

    ~ John Maynard Keynes

    "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
    ~ Source: from page 101 of the book "Capitalism, the Unknown Ideal" by Ayn Rand with additional articles by Alan Greenspan - 1966


    Most gold and silver analysts (even the good ones) don’t understand the falling EROI and how it will impact precious metal mining. They assign future values to potential reserves and resources in the ground without realizing there may not be the ECONOMICAL ENERGY in the future to remove it from the ground.

    The Silver Institute was nice enough to furnish me the 2010 Silver Survey as a guide for my future articles. I will keep some of the more important information for my future articles, but here are some interesting trends:

    The Top 5 Silver Producing countries supplied 445 million ounces of silver out of the 735 million ounce total in 2010. This accounted for 60% of all global silver production. Here are the top 5 and their production figures (in million ounces):

    MEXICO = 128.6
    PERU = 116.1
    CHINA = 99.2
    AUSTRALIA = 59.9
    CHILE = 41.0

    The United States came in at number 7th at 38.6 million ounces. What is interesting is this, of the top 20 COUNTRIES that produced 715 million out of the 735 million ounce silver total, only 8 increased production while 12 had declines or remained flat.

    Of the top 20 silver producing COMPANIES in the world, only 5 increased production while 15 declined in production or remained flat. The big winner was GOLDCORP that increased silver production from 11.8 million ounces in 2009 to 23 million in 2010.

    The important trend here is similar to what is taking place in global oil production. Only a handful of countries are increasing production, while the majority are declining. Peak oil, will mean Peak silver as well as peak metal mining as a whole.


    According to the 2010 Silver Survey, 70% of silver came from by-product mining base metals. Here are the exact figures:


    PRIMARY = 30%
    GOLD = 11%
    LEAD/ZINC = 36%
    COPPER = 22%

    The Primary silver production accounted for 46% of the increase of silver in 2010. Even though this is significant….base metal mining produced 70% of the global supply. When the Fiat monetary system collapses, the greatest depression in human history will befall upon the world. The demand for base metals will fall off a cliff, which will in turn destroy overall silver production.

    It doesn’t matter how many more primary silver mines come online in the future; they will not be able to offset by-product production from base metals mines. Furthermore, the falling EROI will make any mines with low ore grades UNECONOMICAL. So, all those huge porphyry deposits with enormous resources of very low grades will more than likely never be mined.

    I have tried to have a debate with the folks at the USGS about the falling EROI, but they are nothing more than bureaucrat geologists taking a good paycheck for doing really nothing of value.

  6. Just when I was ready to loose hope ...

    @SRSrocco - I Love a good read! Thank you.

    Kudos to SGS for a terrific blog and to his continued efforts in the face of adversity. Cheers.

  7. @SRSrocco - Not sure what to take from your second entry? "...demand for metals will fall off a cliff, which will in turn destroy overall silver production."

    Production is not keeping up with demand for Silver - this, I think, is clear. Why should we expect demand to fall?

    Demand falling = price down. That does not sound good for Silver or Gold. What am I missing?

  8. dasPro....in all depressions, production declines. The reason why we still have some sort of economy here in the USA is due to the fact that the public believes the FEDERAL RESERVE NOTE has value. The momment they realize it doesn't, the FAN hits the SHEET.

    During the depression of the 1930's, we did have some DEFLATIONARY PRICES. But remember, we had a strong dollar as well as all this untapped oil, metals and fertile soil. Today we have none of the latter.

    Thus, today when the system implodes you will have a HYPERINFLATIONARY DEPRESSION. All those $800 trillion (acutally $1.6 quadrillion) dollars will be trying to buy up REAL THINGS. It will be an event to tell your grandkids if they will survive the collapse.

    This is why prices will not decline. The whole world is in FIAT MONEY. The American Public had put its faith in its HOME EQUITY and 401Ks and etc. Well, we all know they got the old BENDOVER and VASELINE in home equity...so all that is left is their lousy 401k's, IRAS and Pension Plans....another ponzi scheme.

    The FED realizes this....they can't allow STOCKS to decline even though every analyst sees a COLLAPSE in the DOW soon. The FED will have to keep STOCK PRICES from collapsing.

    Anyhow....falling demand of base metals will be very BULLISH for silver. As the stampedes of JOE-BAG-OF-DOUGHNUTS try to exchange worthless FED NOTES for silver or gold, the price will rise towards the heavens.

    Thus...the same thing will occur in BASE METALS even though demand has fallen. The avalanche of paper money and worthless derivatives into REAL THINGS will make this the most wonderful HYPERINFLATIONARY DEPRESSION in human history.

    Grab a coke, a popcorn and enjoy the ride. Stealing a line from GEORGE CARLIN....FOLKS...THERES A LOT OF BULL SH*T OUT THERE....AND IT AIN'T GOOD FOR YOU.

  9. @SGS,

    Why do you hate Jews? This vitriol you exhibit towards Jews, only serves to undermine your posts.

  10. Ex. I dont hate jews. In fact, if you feel it undermines my posts, you can cancel your membership here at $0 a month, and go watch Wolf Blitzer on CNN for uncensored media.

    SRS: contact me via email please.

  11. Sgs...would you mind repeating your email address and I will shoot you an email later tonight.


  12. LOL @ Ex-Dissident, I love it! SGS please stay strong and don't give in to this politically correct bullshit. just look at how much flak Tracy Morgan is getting for making a joke against gay people.

    Ex-Dissident, it's not discrimination if you hate everyone, like he says. If you'd like, I can refer you to the post where SGS ranted on Muslims, who are your sworn enemy. equal opportunity hater.