Wednesday, June 22, 2011

Paging Blythe, 27.72 million oz- an all time low remaining, paging Blythe.

Tonight's commentary will be lengthy. A. b/c I have found the time. B. B/c we have a special guest post tonight. Be sure to thank me.

I want to dive into todays news. There are several things I would like to bring to light. The 'registered' comex inventory slowly crept into a coma today, as it registered its all time low, ever. Soon enough it will re awake from this coma only to be shot in the head, again, and topple on the floor enjoying its long awaited dirt nap.

Those who are confused as to why some miners are getting slaughtered still can take some advice from John Embry today on KWN, "When asked about downward manipulation of the gold shares Embry said, “I think there is some outside force that is doing this. I’ve heard speculation that there’s a government driven algorithm to actively sort of make the gold stocks look terrible and keep people away from them. I certainly heard Jim Sinclair and Dan Norcini’s comments about the hedge funds driving gold stocks into oblivion.

I don’t understand because eventually how do you cover these things? The gold price is going to explode and these things are so cheap relative to the gold price. There’s only been one other time in my career when they’ve been cheaper and that was in 2008 when we had the complete panic, and see what they did after that, stocks recovered smartly. So they are going to recover again smartly, if hedge funds are doing this, they must have a death wish.”

More good news has arrived:

Banks that sold insurance on the debt of Allied Irish Banks will have to pay out to investors in the nationalized lender's debt despite complex legal manoeuvres by the Irish authorities to avoid putting the lender into default.

By Harry Wilson, Banking Correspondent
6:00AM BST 22 Jun 2011
Comments95 Comments
The International Swaps and Derivatives Association (ISDA) yesterday said that a "credit event" had occurred on Allied debt, meaning the bank has effectively defaulted on its debt, a situation the Irish government has gone to extreme lengths to avoid.
Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially, its senior debt, have been activated by the decision of the ISDA determinations committee that decides whether a borrower has defaulted.
The decision by the committee, which is made up of 10 major banks, follows the announcement earlier this month by the Irish High Court of a "subordinated liabilities order" that changed the terms under which junior debt in Allied was originally sold, forcing holders of the bonds to accept an extension in the maturity of the debt to 2035.
Allied had already missed a coupon payment on its Lower Tier 2 debt. However, changes in the law enabled the bank to avoid being forced to be formally placed in default.
For the market, ISDA's decision renders this move largely irrelevant as it means the bank will be categorised as in default in the eyes of investors.

This is not good. The actions of the central banks, IMF and all other parasitic PTB entities are cornering these institutions, countries (Greece and soon to be America!) with no exit strategy. The fire sales are coming. Or the defaults are coming. Case closed.

My Guest post tonight is from SRSrocco. Seeing now that the Comex and Kid dynamite are quite confident that the Comex is flush with the shiny orgasmic metal, lets take a closer look at the supply side, of course, this is also in rampant decline as well.


Chart taken from the USGS Silver Mineral Industry Surveys

Silver production in the United States for JAN-MAR 2011 was 280,000 kilograms (kg). The same time last year it was 318,000 kg. Even though it shows 316,000 kg., if you look at the top of the chart you will notice that March 2010 was revised to 116,000 kg. This is a decline of a whopping 38,000 kg, or 12% over last year.
The constant theme in most of the USGS monthly reports as to why we are witnessing these declines is due to “FALLING ORE GRADES”. This is something I wrote about in an article titled “Peak Silver and Mining by a Falling EROI” which can be found here: Click here ...

According to the World Silver Survey, US silver production has been bouncing between 36-40 million ounces a year since 2005. Last year the total silver production was 38.6 million ounces. If the decline rate of 12% (JAN-MAR) continues throughout the remainder of the year, we could see a drop of 4-5 million ounces of silver in 2011. That would put total US silver production at 34 +/- million ounces.....less than the amount needed for US Silver Eagle coinage sales in 2011 which are estimated to be 36+ million.
Putting this into perspective, US Silver production in 2000 was 1,860 metric tonnes. In 2010 it was estimated to be less than 1,250 metric tonnes. That is a decline of 32.7% in just 10 years.
The United States supposedly has 8,000 metric tonnes of gold in reserve, but according to the USGS report, the US Treasury holds a lousy 220 metric tonnes of silver at the US Mint. Interestingly, this balance of 220 metric tonnes has remained the same since 2000. Is this not a good reason to be holding physical silver?
Falling ore grades and a declining EROI (energy returned on invested) will contribute to a peak in global silver production much sooner than later. Very few if any analysts are including this in their forecasts of future silver production from junior mining companies….which surprises me to no end.
In future posts, I will provide additional information on why a significant portion of future silver resources may remain in the ground due to the fact that in a falling EROI environment, this silver may not be economically viable to extract. This too is very bullish for owning silver going forward.


You know how to thank me ladies and gentlemen!


  1. You know, this is shaping up to be a very ummm... exciting summer. We'll see if TPTB can somehow dance around this debt default issue. We're still not at the uncontrolled phase yet, but may be getting close.

  2. I would love to buy SIL etc... but if they pull at 2008 in July/August, I will get hosed, even though its cheap!

    But, maybe this time people flee to PM's and not the dollar to get rid of their Walmart, Apple and Google stocks?

  3. Straight off Reuters:

    Bill Gross on Wednesday said the Federal Reserve will likely hint at a third round of bond purchases, better known as "quantitative easing," at its next Jackson Hole meeting in August.

    Jackson Hole is an annual global central banking conference, led by the Fed, which takes place at Jackson Hole, Wyoming. It was at this event last year that Fed chairman Ben Bernanke said the U.S. policymakers were prepared to make a major new investment in government debt or mortgage securities if the economy worsened significantly or if the Fed detected deflation -- a prolonged drop in prices of wages, goods and assets like homes and stocks.

    Gross, the co-chief investment officer of PIMCO, the world's top bond manager, on Wednesday said on Twitter: "Next Jackson Hole in August will likely hint at QE3 / interest rate caps."

    PIMCO oversees more than $1.2 trillion in assets, mostly in fixed-income. PIMCO confirmed Gross had sent the Tweet on QE3.

    Last week, Gross first introduced the idea that the Fed on Wednesday could signal that interest rates could be capped if warranted due to soft economic growth.

    Gross said on Twitter last week on Tuesday that: "QE3 likely to take form of 'extended period' language or interest rate caps on 2-3-year Treasuries."

    Gross also said on Twitter last week: "Next week's Fed statement will likely stress 'extended period of time' language or even a period of interest rate caps."

    The Fed will issue its policy statement after the close of its meeting on Wednesday.

    The recent soft patch of economic data has increased speculation over whether U.S. policymakers will perform a third round of bond purchases, an unconventional monetary measure known as "quantitative easing," or QE2. The second round of QE2's $600 billion in purchases will conclude on June 30.

  4. I noticed at today's dog and pony show, Shlomo's boyfriend Liesman asked about debasing Uncle Buck. Right off the bat, Shlomo goes for the big guns and rattles off a scary campfire story about 2008 and the flight to quality. Any poor sap (myself included) who went through that horror show holding mining equities had better take heed. These fuckers own the playground. They hate silver. They hate miners. They hate anything that might threaten their monopoly over monopoly money. They will upend the parcheesy board before taking a hit. Unless you're a retard, you can see with the xau:gold ratio @ 8+ someone's fat ass is in the default position sitting right on top of mining equities. They want that shit to stay in the ground.

  5. > " U.S. policymakers were prepared to make a major new investment in government debt or mortgage securities"

    LOL! Keyword "investment" in "debt" and "mortgages". Meanwhile I'm investing in edible frozen dog shit and marketing it as Ben and Jerries pellets.

  6. for the alex jones fans: he was pushing that forex story hard that it was akin to 1933 confiscation etc ... robby noel chastised him, and even sycophant chapman corrected this bogus world is coming to end typical AJ tactic.

  7. I dont understand why AJ does shit like that....he brings up and discusses legitimate info...and then taints it with BS like this....

  8. I have to take Jones with a pinch of salt. Sometimes is good, sometimes its bad. If he got rid of the freak out over the top shit and really really concentrated on facts not just he opion of the facts, he would be great and really helpful to everybody. I notice alot of his callers are fruitcakes!

  9. Back to the Main Event. So.. Silver = NoBrainer; and Mining stocks = ??.. Im trying to understand i1's comment above " Unless you're a retard, you can see with the xau:gold ratio @ 8+ someone's fat ass is in the default position sitting right on top of mining equities." Im gonna play that retard card now... Can anyone elaborate on this? My gut tells me the "fatasses" would be smart to correct the lows at present? Check out the Chinese mining company coming to American Soil, coutesy of Soros. Do "they" really want that shit to stay in the ground??

  10. OOps.. 4got link for post above...

  11. I wrote a letter to family and friends tonight.. This is apart of it..

    Our Ancestors walked around and Paid their "Debt" with "Real Money" ... Gold and Silver.. Two and a half Bucks was So Important that it was made of .12 of a Troy ounce of GOLD until the year 1929 ! If Gold spot is at, 1,550 dollars an ounce, just in Gold today, that Gold pieces is worth . .12x1,550= $186.00 dollars today.. Now that's one hell of a loss in Buying power in the Dollar in just a short eighty years.. The more Scary thought is what the hell will that gold piece be this time next year.. My guess $1000.00 ! The Government and Banks will blame Scapegoats (OPEC )when gas/milk is at eight bucks a gallon, when they just keep printing money, and devaluing yours.. Beautiful thing about Gold and Silver.. You Can't Print the Physical !

    Going into July I think we should all get more prepared.. Greece will fall to the Banksters.. Get chopped up for Fake Pennies on the Fake Dollars.. The People of Greece now seeing the handwriting on the wall and are now buying up as much Gold and Silver as they can afford.. The Euro will collaspe.. There will be less Gold and Silver to buy up, and very shortly after the Collaspe of Greece will be Europe and the Euro.. The Ponzi scheme of Fiat money will be over.. America's Bastardized Dollar will Fall, Very Shortly after !

    Several of you I'm writing this to, know as well.. But for some of you, Get Prepared ! Time is Running Short ! I know some of you will think I'm Nuts ! But when you hear the Euro has Fallen ! ,,, stop whatever your doing and get out of the Dying Dollar... Food, Water, Gas, Silver.. Use your Brains.. Anything in Paper will go to ZERO ! It cost our Government six cents to print a One or Hundred dollar bill.. What do you really think it's worth !

  12. and dont 4get... During the California Gold Rush of the 1800's, People crossed America on foot and wagons to dig in the dirt for it, knowing full well it WASNT edible, but very VALUABLE.

  13. If you read my post above, just food for thought.. I bought a bag of cotton balls for my wife today.. The cost $2.86 ! Eighty two years ago, two and a half bucks was Struck in Gold !

  14. In the week prior to 9/11, an “extraordinary” amount of put options were placed on United Airlines and American Airlines stocks. If you are unfamiliar with the stock market, a put option is financial contract between two parties that will offer the buyer insurance against a company’s excessive loss. Someone who purchases a put option is expecting a stock to drop or they are protecting their assets. Between September 6 and 7, 4,744 put options were purchased on United Airlines stock, compared to 396 call options. On September 10, 4,516 put options were purchased on American Airlines, as compared to 748 call options. The trading activity was 600% above the normal level. United and American Airlines were the only two companies who had planes hijacked on 9/11. There were also an abnormal number of put options purchased in companies who had a stake in the World Trade Centers.

    The majority of the suspicious trading was linked to Deutsche Bank Alex Brown. On September 12, 2001, the head of the bank, Mayo A. Shattuck III, resigned from office. The previous director of the bank was A. B. Krongard, who is the former head of the CIA. Citigroup Inc and Morgan Stanley also received an abnormal number of put options, and both companies held offices in the World Trade Centers, and saw a decrease in stock price after the attacks. On September 10, 2001, Raytheon, a defense contractor, had an anomalously high number of call options traded. The Securities and Exchange Commission launched an insider trading investigation, in which Osama Bin Laden was a suspect, but no action was taken. The trading was traced to areas all over the world, with most activity occurring in the UK, Italy, Germany, Japan, Switzerland, France and the US.

    In the days prior to 9/11, the Chicago Exchange saw the highest number of United and American Airlines options traded in history. The names of the investors remain a mystery, because they never claimed their money. After it was discovered that a single U.S.-based institutional investor, with no conceivable ties to al Qaeda, purchased a large amount of these options, the 9/11 Commission dismissed the importance of the events. Unfortunately, the abnormal trading did not tip off law enforcement, as intelligence agencies constantly monitor the stock exchange and the sudden rise in activity could have allowed analysts to “connect the dots” and see that a major event was about to take place involving American Airlines, United Airlines and The World Trade Centers. However, nobody could have imagined the scale of the tragedy.


  15. I'm kind of gabby tonight.. lol Been drinking.. If in 1929 you had saved $1000.00 in gold, at twenty dollars an ounce.. At $1550.00 an ounce today, it would be worth $1,550,000 today.. But the difference was the inflation factor.. At that time, it was going up slowly.. That was still after the creation of the Federal Reserve.. Before that, there was ZERO INFLATION !

  16. Rick,, I joined the U.S. Army in 1975, while I was still in High School.. Probably one of the Longest Peace times, in American History.. Since the Federal Reserve at It can make you feel bad, about Loving your country.. I just wish, that I knew then, what I know today..

  17. SGS: HOO-RAY for making SRSrocco a regular "Guest" post!
    THIS man has had the most extremely insightful and spot ON observations I have read here by posters since I joined.I miss his original avatar, though! Looked like a stupid hillbilly! We know them guys(hillbillies) almost wooped YANKEE ASSES if not for.....(oh, don't get me started!)
    EXCELLENT post SRSrocco.

  18. SGS, you still looking at AAPL? What do you think of this chart:

  19. i hope no one watches more docs than me or you have zero life haha (i have always been hooked on them) ... anyhow, I stumbled upon this one tonight and my gawd, it starts a lil slow but is sheer genius ... it's 1:33:18, but if you waste time watching TV, shut it off and watch it with one of your teens and wife, it will leave you with 1000 questions to discuss and something your child will never forget and benefit from ...

  20. So, I've taken the red pill and stacked up on PHYZZ. But I live in the UK, how do I protect it all when TSHTF?

  21. @bflowers1: I wrote a letter to my email list about 18 months, and almost heard 100% crickets. Got my mom to buy some silver. My millionaire uncle said it was "too late" for him to get in. You've tried, you know you've tried and that is all you can do. Don't waste any more energy. That might sound cruel, but it is true. Good luck.

  22. @Red Pill Swallower: DON'T TELL ANYONE YOU HAVE SILVER. For christ sake, you guys aren't even allowed to defend yourselves (properly) over there. Buy some long store food, buy bottled water. Buy a good aluminum bat, mace, knives. Also, learn how to fight and get more muscular. Also, be the BEST employee you can be so your company will get rid of you last. My thoughts are with all of you that have been stripped of gun rights. Good luck.

  23. How far are they going to drag it this time?

  24. Once SILVER breaks down through 35.00US it's over!

  25. Over? Did you say over? Nothing is over until we decide it is!
    Was it over when the Germans bombed Pearl Harbor? Hell, no!

  26. Weather Unit, you just showed us how fucking dumb you really are. Now we know why your blog gets 10 visits a month (all from you). I bet you brag to family and friends(If you have any) that you run a very popular internet blog with millions of hits per month. LOL

  27. WU: I hope silver goes to Zero too. Like when you said $21 a few weeks back then it headed to print $40.
    You can sit there and fret about spot price silver, I'll continue collecting the phyzz.

    Dont post here, you dissapeared for two weeks it was nice and quite...go away again.