Things That Make You Go Hmmm: "My Name Is Grant Williams And I’m a Precious Metals Bug"

Tyler Durden's picture

From Things That Make You Go Hmmm, April 30

My name is Grant Williams and I’m a precious metals bug.

There. I’ve said it.

It feels good to get that off my chest.

Of course, those amongst you who have been riding alongside me these past few years probably already had a sneaking suspicion that was the case and, I imagine, several more of you are now tutting, rolling your eyes and muttering “I KNEW it. Where’s that ‘Unsubscribe’ button?” (bottom of the last page – no offence taken). Well today, we’re going to talk about precious metals again I’m afraid, but in a broader sense if that helps at all. For readers who are over the whole precious metals thing, there’s a nice cartoon on the last page and you’ll find several stories about alternate subjects scattered throughout pages 7 to 15). For those of you still reading at this point, join me inside the recesses of my mind. Please keep your hands and arms inside the carriage at all times.

Whenever I look at an idea as either a potential trade or a possible thematic shift, the very first question I ask myself is ‘does this idea make sense?’. Plain old common sense. Nothing to do with the numbers or the likely quantum of any associated move, but would the idea seem reasonable if presented to someone with either zero, or at best a very limited background in finance?

Whilst stories around individual stocks can fulfill this criterion reasonably regularly, they often operate in confined parameters (a particular geography or a particular market segment for example) and so an idea is easier to explain and simple to quantify. It is much harder to find bigger picture, macro ideas that make secular sense because, for the most part, these ideas– but it is these big picture shifts that contain the possibility to make real money.

To illustrate this point, one of my favourite charts of all time demonstrates how, by making a single trade in each decade, it was possible to take $35 in 1970 and turn it into $159,591 in 2008. Of course, had you then made a 5th decision and completed the circle by reinvesting that $159,591 back into precious metals - this time silver - in 2008 (and, to ensure nobody accuses me of picking the low price we’ll take the year high of $21, recorded the day Bear Stearns disappeared), you would, this week, have turned your $35 into a staggering $372,379.

Five simple, considered decisions over a forty year period for a gain of a little over 1,000,000%.

Easy..... Kind of.

The pressure to chase things, to follow momentum or to be ‘involved’ is a considerable influence on the decision-making process of most investors. It’s easy to get caught up in trying to pick interim ‘tops’ in a rising market with the intention of buying back on pullbacks to add a little vig to any gains being made. Get it right and you feel as though you’re a seer - possessed with vision many hope for but few achieve; get it wrong however and the consequences are potentially far, far worse. The chances are you’ll find yourself sitting on the sidelines watching your great idea make other people very rich because you just can’t pull the trigger to buy something 5% higher than you sold it - or 10%, or 20% - and for what? Because you tried to game a quick 5% extra by proving you could time the market?

I have lost count of how many calls I have had from friends of mine who have bought either gold or silver at some point in the bull run (sadly, most were late to the party because they just didn’t believe the story - but we’ll get to that later) and wanted to know whether it was time to take some profit. I’ve lost count of the number of calls, but the questions, in essence, were the same:

“Silver’s run really hard here. Should I sell some? What if it pulls back?”

“Gold’s over $1,500 now and I bought it at $1,200 - should I sell it and look to buy it back when it corrects. It’s gotta correct, right?”

My answer to both questions was the same. “What if it doesn’t?”

Yes, silver is extended. Yes, gold has performed incredibly well. But the point here is to understand WHY you bought them.

If you bought silver for a trade then go ahead and sell it - depending on your entry point it has been a hell of a trade. If you bought gold as a trade then the same thing applies. If it DOES pull back and you want to play again you can. If it doesn’t, then you still made some money. But if you bought either of the precious metals as an INVESTMENT, then you need to ask yourself a whole lot more questions before you call your broker, visit your bullion dealer or place an order to sell electronically.

The reasons for buying precious metals are myriad, and their intrinsic worth will continue to be debated - probably for centuries - but, like it or not, based upon 5,000 years of history, gold IS money. Silver IS money. You can argue it. You can flat out denounce it, but there will always be somebody happy to take your gold and silver off you at whatever market price you may deem ridiculous. You can’t win. Nobody can unilaterally declare the idea of gold and silver as stores of value err..... well, valueless.

Last year Mark Dice went to the beach in California and tried to sell a one-ounce solid gold Canadian Maple Leaf coin (worth, at the time, $1,100) to passers-by for $50 cash.

No takers.

This was one of my favourite exchanges:

Dice: “Wanna buy it?”

Dude: “No thank you”

Dice: “Twenty bucks?”

Dude: “Not for me.”

Dice: “It’s Canadian.”

Dude: “Oh, definitely not”

But the best part of the video is when Dice tries to sell the coin to a passer-by who has a live parrot casually sitting on his shoulder. When you see a man in the street wearing a tropical bird as a fashion accessory look at someone trying to sell him a 1-oz gold coin worth $1,100 as though HE’S crazy - you’ve pretty much hit rock bottom. (If you want to watch the video, it’s HERE but PLEASE... no emails about Dice’s views on anything else - to me it’s just an interesting video)

But enough about parrots and passers-by - they are mere distractions from the point I am trying to make here.

In a big picture sense, as you can clearly see from the chart, left, owning precious metals (in this case gold) has been the right trade for the last ten years - it has been one of those once-in-a-decade decisions that, if you had made and stuck with, would have made you real returns. However, the volatility that has been evident during periods of those ten years is such that many people were, to use Richard Russell’s analogy, ‘shaken from the bull’. Many people saw 10% corrections or even the big shakeout after 2008 and, with very few believing gold was anything but the next bubble, they dumped their holdings - convinced either a ‘major correction’ was under way or just around the corner or that the bull run in gold had ended and the bubble had burst. Many were selling with a view to buying back and many were selling fearing a return to $300 gold was not only possible, but probable. The ‘big trade’ was all-but forgotten in the panic of deleveraging.

Many who sold have yet to buy their gold back and have missed out as gold has more than doubled from its late-2008 lows.

In Bud Conrad’s chart, he shows how a switch from one asset class to another once every ten years would have been all that was required and it just so happened that, at each crucial juncture, another asset presented itself as the next ‘big trade’. The danger is that, in following Bud’s example to the letter, especially now precious metals have run for ten years, it would be easy to switch out of them and into the next ‘big trade’. But what is the next big trade?

It could be a short trade in US Treasuries, as many believe (certainly when something is at zero and can’t, in absolute terms at least, go below that level - in this case the discount rate - it is a pretty safe assumption which way it will ultimately be headed). It could be a long position in crude oil or a basket of commodities if you believe in all or part of the ‘Peak Everything’ theory laid out beautifully in the great Jeremy Grantham’s latest letter - which you will find HERE. (As an aside, if you HAVEN’T read it yet - I recommend you take the time to do so as it is a truly marvellous piece of work - even by Jeremy’s lofty standards - and one you will doubtless want to read again at some point.)

But here’s the thing. What if the big trade is buying precious metals - again?

At no point does Bud Conrad say you can’t have your money in the same asset class for consecutive decades - in fact, Bud doesn’t lay out the rules at all because there aren’t any. It’s about finding the ‘big trade’, making sure the logic of it is sound to you and then sitting with it until it has either run its course, or you feel that a better opportunity for long-term gain has presented itself.

Has the precious metals trade run its course? Well, I guess it’s possible - but let’s look at the factors that are affecting the price of what, for the specific purposes of this part of our program, we will refer to as ‘monetary metals’.

Until 1971, gold backed every dollar in circulation. Period.

Behind every $35 in paper money, in a vault in the United States, sat an ounce of gold. Quiet, immutable, stoic. The gold couldn’t be printed at will or created out of thin air. The idea of dropping gold from helicopters would have seemed downright dangerous or overtly stupid. Of course, as it turns out, dropping paper money from helicopters has proven equally dangerous - particularly to the value of the dollar itself which broke through 73 this week and has now lost roughly 90% of its purchasing power since the decision was taken by Nixon to shut the gold window.

Never were the words of Nixon’s Treasury Secretary, John Connally, more apropos than today:

“...[the dollar] is our currency, but your problem”

Since that day, with the restraint of a gold-backed dollar removed, the amount of dollars in cirulation has steadily increased until, as the waves of 2008 crashed upon the world’s shores, it absolutely exploded. The graph below shows the adjusted monetary base, with the near-vertical updrafts representing QE1 and QE2.

My friends Paul Brodsky and Lee Quaintance of QBAMCO recently published parts II & III of their paper entitled ‘Apropos of Everything’ and I would recommend everyone who reads this to email Paul and ask him to send you a copy of all three parts as, together, they comprise one of the single best reads I have seen in years. In fact, if you only have time in your busy day to either finish reading this or dig into Paul and Lee’s exceptional writing then let me help you out: STOP READING THIS AND EMAIL PAUL. NOW. 

In ‘Apropos of Everything’, Paul and Lee revisit their ‘Shadow Gold Price’ which is a measure of what returning to a gold-backed dollar would mean to the price of gold:

In a report distributed to our investors in December 2008 we divided Federal Reserve Bank Liabilities by US official gold holdings and dubbed it “The Shadow Gold Price”. A few months later we began using the more conservative denominator, the Monetary Base, in our calculation. As it turned out, dividing the US Monetary Base by US official gold holdings happened to be the very formula used in the Bretton Woods system to establish the global fixed monetary exchange rate. Our logic was confirmed by long convention...

The “Flat” column in the table above shows our current SGP, which implies the substantial devaluation of purchasing power of the US dollar that has already occurred. Are we nuts? Are we asserting gold should be valued at $10,000/ounce when it is trading around $1,500/ounce in London and New York?

The SGP’s purpose is to provide a sense of magnitude as to how much the US dollar has already been devalued and how much further it may be devalued. (Obviously there can be no guarantees about future pricing.) We believe the Shadow Gold Price provides the intellectual framework for the magnitude of necessary future global currency devaluation. We feel most comfortable with this metric for two practical reasons: 1) there is recent precedent for its use and 2) it actually produces a lower figure than othervaluation metrics that include systemic credit in their calculations...

To put this table in perspective, the Fed already increased the US Monetary Base over 200% since 2008, from about $850 billion ($3,251 implied SGP) to an estimated $2.6 trillion (following the completion of QE2). It is important to note that the Monetary Base only constitutes systemic bank reserves held at the Fed and currency in circulation. It does not include upwards of $70 trillion in US dollar-denominated claims, a significant portion of which conceivably must be ultimately be repaid in money from the Monetary Base that does not yet exist.

And there, in a nutshell, is the ‘big trade’ in gold.

How do the world’s central banks find a way out of the dire straits in which they find themselves? Faltering economic growth (look at this week’s US GDP number), insolvent banking systems in multiple insolvent sovereign countries (you know who you are), plummeting consumer confidence (Japan and Germany the latest examples of this phenomenon), crippling debt levels at both the national and individual levels (higher US deficit ceiling anybody?), spiralling inflation (no matter WHAT ‘core’ numbers may tell you) and their favourite (and some would say ‘only’) tool to fight it, namely interest rates at or close enough to zero to make them almost ineffective.

Fear of all these issues amongst investors has driven them to what they consider ‘safe’ money. Money that can’t be manufactured at will (though it CAN be confiscated - but more of that another day) and that will protect their purchasing power.

Yes, there is definitely some speculative froth in the monetary metal prices (nowhere more obvious than silver at the moment) but, structurally, there are more reasons why monetary metals could well be the next, next ‘big trade’ and that resides in the difference between the futures price and that of the metals themselves.

Historically, the monetary metals futures contracts were used primarily by gold producers to hedge their exposure to fluctuations in the gold price and/or to lock in prices against their forward production. Simple. There have been all sorts of conspiracy theories about central banks leasing their gold holdings in order to keep the price of gold down, thus validating their fiat currencies, and of bullion banks manipulating the futures prices to make profits from the technical funds, but, again, we will leave those aside today.

In August 1999, John Hathaway of Tocqueville Gold Fund wrote an essay called The Golden Pyramid (I have linked to it in a previous edition of Things That Make You Go Hmmm..... but in case you didn’t see it, or didn’t have the time to read it, I would urge you, if you have any interest in the monetary metals, to do so. You will find it here)

In his essay, John lays out quite clearly how what he calls the ‘Golden Pyramid’ works:

The old currency gold/pyramid has been replaced by a little understood labyrinth of paper claims against gold. Responsible senior officials of mining companies, central banks, and bullion banks cannot begin to understand the internal mechanics in order to make appropriate judgements of risk. There are few published figures, no reserve requirements, no supervision or regulation, and no accountability. It is the private domain of bullion dealers, central banks, and mining companies. The credit worthiness of the old currency/gold pyramid was quantifiable. The credit worthiness of the new pyramid can only be an educated guess. Our guess is that it is bankrupt.

The gold derivatives pyramid is a vigorous free market creature. It cannot be put down with a simple declaration that the paper is no longer redeemable in gold, as governments did with currency. It is a short selling scheme that has become a trap from which few short sellers will escape. Paper claims in the form of derivatives far exceed the underlying physical metal on which they are based. The trust, which balances this new pyramid, is based on false assumptions and lack of information. Paper gold claims have proliferated at a pace rivaling any government printing press. A surfeit of paper gold has driven down the price of the physical on which it is based.

The structure can survive as long as bullion dealers, the mining community and the financial media subscribe to the bearish case. But the position of short sellers is precarious. This is true whether gold stays at current levels, or drops below $200/oz. The point is, they will be unable to realize their paper profits, and stand to lose money on their positions in the aggregate. The compound miscalculations on which the gold market is based rank with the blowup of the yen carry trade in 1998. The yen carry disaster illustrates how over-investment and near unanimity of market opinion can lead to a vicious squeeze. Compared to the yen, gold’s liquidity is microscopic. The coming squeeze will lead to a several hundred dollar rally and a permanent change in attitudes towards gold.

Read that last sentence again.

The coming squeeze will lead to a several hundred dollar rally and a permanent change in attitudes towards gold.

Many casual readers of John’s work would have found that statement difficult to accept in 1999. They would have, in fact, dismissed his words simply because the outcome he was proposing - a rise in price of several hundred dollars - would have seemed extremely unlikely with Gold trading around $300. And yet, the beauty of reading this essay now, 12 years later, is that you can clearly see a simple idea that, with the benefit of hindsight, makes complete sense.

The trick comes in trying to find these simple, clear ideas WITHOUT the benefit of hindsight.

So, to recap:

Sovereign governments are awash with debt; several are on the verge of inevitable default (you STILL know who you are), Central Banks around the world have printed trillions of units of their respective paper currencies in the past three years in an attempt to stimulate their moribund economies (which are either slowing in the case of the US and the UK, or are tipping back into recession like Japan), politicians are starting to finally understand that Austerity ISN’T Calvin Klein’s new cologne and are about to find out just how hard it will be to apply in the real sense, consumers are pulling in their heads and are more concerned about the future than at any point since the depths of the crisis in 2008, the housing market in the United States - Ground Zero for the debt-driven disasters that tipped the world on its head - has turned down once more and is about to make new lows just as a slew of Option ARM resets are due, inflation is starting to bite in a real way, not only in Asia, but in the West as well and all the REAL money that has ever been mined could STILL only fill a cube 67 feet in each direction (thanks for that, Warren).

Simple? Clear?

Full report:

Hmmm Apr 30 2011

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DavidPierre's picture

Remember when...

Remember way back when... if you spoke your mind and said something crazy like "Gold really should be trading at $600 or more" people would just laugh or roll their eyes.

$50 Silver was a whole other story while trading for so many years between $4 and $7, a new high in Silver? $50? Never, not possible, can I give you the name of a good shrink?

Now trading a new highs (albeit suppressed) prices for both Gold and Silver that even 2-3 years ago were thought to NEVER be possible!

But there is a kicker, the Dollar although quite weak has still not totally collapsed and is still being propped up artificially to continue the facade of functionality.

What do you suppose Gold and Silver will do once the artificial support to the dollar gives way?

Again, many many smart people have been putting "Dollar price" forecasts out of $2,000, $5,000, $10,000 and more. Whatever the highest number is that you have EVER read is flat out wrong because, as Jim Sinclair says, "QE to infinity" is where we are headed. I completely agree with this concept as mathematically the U.S. (and the entire world for that matter) MUST inflate and print at rates ever greater and in an exponential fashion!

"Infinity". Think about this concept for a moment, "infinity". What does it really mean? Can it ever really be attained? Doesn't it really mean that something "goes on forever and has no end"?

Of course it does but the Treasury and Fed cannot borrow and print forever because markets will balk long before the "exponential stage" really gets going. The opposite of infinity is "0" or in other words NOTHING which is exactly where the Dollar is headed no matter what policy response is chosen from here.

"Remember when"... in the future people will look back $50 Silver and $1,500 Gold as if they were FREE.

These levels in the future will look far cheaper than $4 Silver and $250 Gold does now! This entire episode is all about the end of a financial and monetary system with no foundation.

"This is for all the marbles", it truly is. Wealth in paper has been created and believed in for nearly 100 years now, once we make the "jump" to the next monetary system, those holding real money assets will be the ones who accrue ALL THE MARBLES!

ALL of the paper wealth will accrue back to where it always belonged, into real money!

$100 days, $1,000 days $10,000 days will be commonplace IF they don't evaporate the Dollar for another currency. The future will be entirely about "revaluation". It is happening now but once the process goes exponential it will be too late.

Many many people believe it is already "too late" and Gold is "too high". It is not and you can still purchase Gold and Silver for paper currency. The day will come when physical metal will not be offered and paper not accepted, THAT is when it will be "too late"!

 Call it the "infinity zone" when no amount of paper currency will bring physical metal out of it's deep dark sleep and onto the market.

 Scary concept this "infinity thing"!

FaithEqualsZero's picture

Isn't it interesting how all the other metals rose about 2% on Friday. Yet silver was down. Seems as though the powrz diverted all power to the silver deflector shields in order to keep it under $50.

mogul rider's picture



let me get back to you on that construct

Holy mother of pearl

It is different this time - LOL


It seems the Huffington Post lost anotehr reader just now



markmotive's picture

Today is's silver bull market is way behind the bull of the 1970s.



e_goldstein's picture

Vote Sarah Palin, bitchez?


Personally, I'm still long pitchforks and torches.

e_goldstein's picture

and boiling vats of tar and dead geese. 

gall batter's picture

"... confirmed by my coin dealer - he knows everything and is also a man of deep Christian faith."  hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha!  and ha!

Hephasteus's picture

I'm just a simple texan christian..... With a price projection on silver.

ATM's picture

Your price projection is missing one simple attribute - time. When will silver hit your projection? Two months. EOY? next millenium?

I have a price projection too. Silver to infinity within 20 years when priced in dollars/euros/yen/pounds..., and probably much, much sooner but gold will be Infinity x 50.

Cui Bono's picture

Hey Tex, Is your coin dealer J Noble Dagett?

rocker's picture

Poof.  I think Tex and the dealer just a magic carpet ride to the twilight zone.   Gone 

Bob's picture

Swagger for Christ, yo!  Honestly, I'm likin' it. 

RockyRacoon's picture

Hey!  I figured it out.


I used to get his silver emails but couldn't stomach the bible thumping.


Jason Hommel's Bible Prophecy Study on the Pre Tribulation Rapture
Teamtc321's picture


Can I suggest something to you, do some reading here. Meaning, just spend some time reading through all post on topic's that are interesting to you. Not everyone here is an atheist at all.

Not to be blunt or rude to you, but most people here have been following the world economic situation for a long time very very closely. I personally have built many company's from scratch. I personally have gained great knowledge from just reading what other's here on ZH have to say. Hope that you follow what I'm saying there, if not let me be a little clearer. It is very wize to learn from other's that are expert's or have vast knowledge in certain area's.

There is a simple old saying that goes a long way, "sometimes you need to just listen to what others are saying."

Take it for what it's worth TG.

DavidPierre's picture

Sage advice from a wiseman !

jeff montanye's picture

one needn't distinguish plural from possessive when building companies from scratch.

creighton_abrams's picture

once saw the word knife pluralized as knife's. awesome.

Richard Head's picture

Thanks for your contributions, 3 a-holes above.

RockyRacoon's picture

Now you got one below as well.

We've got you surrounded.


contagiousNY's picture

Well said, TC and quite patiently as well, ur a better man than I. Texasgunslinger, it cant be clearer or more reasonably presented than that. Maybe you will realize Tex that coming on this site prosthetizing and trying to "save" members is like me walking into your church in the middle of a mass and shouting "so who thinks silver goes to 50 next week?" It just wont get you the love you are clearly missing.

  And have you considered that that son of a bitch coin dealer sent you here to soak up some pro PM (precious metals) sentiment so that....why, so that you will buy more coins from the bastard! But unfortunately for you its alot more than what you or that SOB knew about here and you are in way over your head for now, so STFU (shut the fuck up) and read without commenting for a really bitchin long time. May God give you the strength to keep your yapper shut and maybe learn a thing or 2.

Al Gorerhythm's picture

How do you kick an internet god botherer off your porch? Is there a "Do Not Post" register we can send these interlopers to?

Tail Dogging The Wag's picture

Kick 'em lightly where it hurts.

Sorry for the spam, folks, but the people cannot eat iPad:

Land Investments / Farmland in Panama

goldfish1's picture

The best way to predict the future is to create it, and you can create any life you want when Jesus is in your heart.

When asked why he refused from the prize of one million dollars, Perelman responded: "I know how to control the Universe. Why would I run to get a million, tell me?"

kumquatsunite's picture

Seriously? I yam a person of deep Christian faith and I say he has no idea what he is talking about. Silver should actually be called Mistress Silver (dibs!) since Dr. Copper is already taken. Silver reflects nothing so much as factory orders and here we have factory orders going belly up in the wake (or should we be saying, the smoke?) of Japan.

Also, with the marriage of Prince William over the weekend, should any of you have taken a peak, you would have noticed a distinct and complete lack of bling showing up. No Beckham bling. No Queenly bling. Nice tiara, but not overly blingy. 

As to dollars going to infinity, pa shaw! There have been "replacement" dollars to keep some circulation going, but "new" dollars...not really. To say that you would have to say there is more money in US currency than ever before, and yet when we see the housing market, speaking of US currency in the broadest sense, all those cashed out digits that went into bank accounts and then were trasferred around to buy big screens and paved walkways, are also "new" dollars,and they be gone.

Silver. Sell in May and go go go away!.Gold too. Just saying. 

DosZap's picture

To interpret the sayings, first one must understand them.

The things of the Spirit are not , nor ever will be understood by the natural man.

Some read the scriptures, and fail to ask, Who,What,Where,When,Why.( they are are all not for every Christian).

To comprehend,or gain wisdom about ANY subject ,one must put much effort into it.

All declarations made by Christ were not meant for every Christian, and esp for all times, until time is no more.

Sites like that,tend to be on the Web for many reasons.

None are for your benefit, in eternity.This subject matter is not appropriate on this Forum IMHO, but before check out time, one best know & have made a decision.

There are no second chances.


fiftybagger's picture

Absolutely shilltastic!  FYI, if he has no faith, he could hardly be your brother.  Did Jesus create any life he wanted?  How about Peter, upside down.  Or John, boiled in oil?  Sorry for responding to religious bait.  Care to swing again?

Absinthe Minded's picture

I know many of you out there don't like The Bible thumping type, but 41 junks, have a heart people. I personally think a lot of you have faith but are afraid of being pigeon holed as some holier than thou type. I am a Christian and attend church regularly and am proud of it. There is no better way to raise your children with good morals and caring for others. Faith is not embarrassing, it is strength and the sooner you figure that out the better off you will be. I have a feeling we'll all be doing a lot more praying before long. Be thankful He will accept you unconditionally.
Junk away, cowards.

DraginDickHedge's picture

My most humble apologies to all more prescient ZH'ers for my defense of this idiot Troll the other day.  I was wrong, yet again.  And for the record, I happen to love Jesus; He is my savior...junk me if you want...I only point this out to emphasize that it is not Gunslinger's religious poit of view...he is just plain STUPID and not even an interesting Troll trying to pull our chains like RT, the departed HarryW and others.  IMHO, this is NOT a forum to discuss religious views.  It is also not a site where "cocktail party etiquete" is followed.  Political views are intrinsic to fully understanding the root of this insanity. 

Ruffcut's picture

I am a spiritual person.  When I bought my silver, I felt nothing. WHen I see my value of holdings go, I still feel nothing.

It is a hedge for a bad ending.

No wonder why there are so many atheist, with someone's "faith" prediction for the price of silver.

"it will easier for a wealthy man to go thru an eye of a needle than into the kingdom of heaven", or something like that.

Oh, except us silver holders?

There is no celebration for the rise of silver and gold. It is only confirmation of worse things to come. Our holdings might barely protect wealth,let alone our lifes.

"pay off my house with one gold coin"

Yep, that's so fucking funny I shit and pissed my pants at the same time.

ciscokid's picture

There was lots of swaps from silver to gold,thats why the silver went a bit lower on Friday,People are changing their silver contracts to gold.

Intellectual Chaos's picture

If people wake up at 4 in the morning to watch a bunch of fake monarchs get married and believe that somehow these fools have an effect on the world, then they will believe in anything and anyone so why not tell them that gold is going to $20,000 and silver is going to $10,000 and that the bank of america adds where they claim to help the average joe reach his dream are all true.  Bottom line is that feed people enough crap and they are gonna believe it until one day when they wake up.  Remember the internet days when companies were valued based on the number of hits or eye balls to a web site.  That is where we are with gold and silver.  Its not over valued because we have all been told so.  Beauty is in the eye of the beholder and government is in the hand of the corrupt and since the hand is quicker than they eye, just be careful when the hand decides to stop playing three card monty.  For now, Bernanke is the best three card monty player in new york and you should take advantage of the fact that every card reads buy precious metals.

Old. No. 7's picture

Oh, they're quite real, and they affect the world more than you know.

zaknick's picture

The Four Horsemen have interlocking directorates with the international mega-banks.  Exxon Mobil shares board members with JP Morgan Chase, Citigroup, Deutsche Bank, Royal Bank of Canada and Prudential.  Chevron Texaco has interlocks with Bank of America and JP Morgan Chase.  BP Amoco shares directors with JP Morgan Chase.  RD/Shell has ties with Citigroup, JP Morgan Chase, N. M. Rothschild & Sons and Bank of England.

Former Citibank chairman Walter Shipley sat on Exxon Mobil’s board, as did Wayne Calloway of Citigroup and Allen Murray of JP Morgan Chase.  Willard Butcher of Chase sat on the board of Chevron Texaco.  Former Fed chairman Alan Greenspan came from Morgan Guaranty Trust and served on the board of Mobil.  BP Amoco director Lewis Preston went on to become president of the World Bank. 

Other BP Amoco directors have included Sir Eric Drake, the #2 man at the world’s largest port operator P&O Nedlloyd and a director at Hudson Bay Company and Kleinwort Benson.  William Johnston Keswick, whose family controls Hong Kong powerhouse Jardine Matheson, also sat on the board of BP Amoco.  Keswick’s son is a director at HSBC.  The Hong Kong connection is even stronger at Royal Dutch/Shell.

Lord Armstrong of Ilminster sat on the boards of Royal Dutch/Shell, N. M. Rothschild & Sons, Rio Tinto and Inchcape.  Cathay Pacific Airlines owner and HSBC insider Sir John Swire was a director at Shell, as was Sir Peter Orr, who joins Armstrong on Inchape’s board.  Shell director Sir Peter Baxendell joins Armstrong on the board of Rio Tinto, while Shell’s Sir Robert Clark sits on the board of the Bank of England.

As a result of the deregulation craze in the US companies no longer have to report their top shareholders to the SEC.  According to 1993 10K reports filed by the Four Horsemen, the Rothschild, Rockefeller and Warburg banking combines still control Big Oil.  The Rockefellers exert control through New York mega-banks and Banker’s Trust, which in 1999 was purchased by Warburg-controlled Deutsche Bank in its bid to become the largest bank in the world. 

As of 1993 Banker’s Trust was #1 shareholder in Exxon.  Chemical Bank was #4 and J.P. Morgan was #5.  Both are now part of JP Morgan Chase.  Banker’s Trust was also leading shareholder at Mobil.  BP listed Morgan Guaranty as its biggest owner in 1993, while Amoco listed Banker’s Trust as its #2 shareholder.  Chevron listed Banker’s Trust as its #5 shareholder, while Texaco listed J.P. Morgan as its #4 owner and Banker’s Trust as #9. 

Thus, Deutsche Bank and JP Morgan Chase – the banks of Warburg and Rockefeller – have increased shares in Exxon Mobil, BP Amoco and Chevron Texaco.  Rothschild-controlled Bank of America and Wells Fargo exert West Coast control over Big Oil, while Mellon Bank also remains a big player.  Wells Fargo and Mellon Bank were both top 10 shareholders of Exxon Mobil, Chevron Texaco and BP Amoco as of 1993.

Information on Royal Dutch/Shell is even harder to obtain since they are registered in the UK and Hollandand are not required to file 10K reports.  It is 60% owned by Royal Dutch Petroleum of Holland and 40% owned by Shell Trading & Transport of the UK.  The company has only 14,000 stockholders and few directors.  The consensus from researchers is that Royal Dutch/Shell is still controlled by the Rothschild, Oppenheimer, Nobel and Samuel families along with the British House of Windsor and the Dutch House of Orange. 

Queen Beatrix of the Dutch House of Orangeand Lord Victor Rothschild are the two largest shareholders.  Queen Beatix’ mother Juliana was once the richest woman in the world and a patroness of the right-wing occult movement.  Prince Bernhard, who married Juliana in 1937, was a member of the Hitler Youth Movement, the Nazi SS and an employee of Nazi combine I.G. Farben.  He sits on the boards of over 300 European companies and founded the Bilderbergers.

When you’re being robbed, it’s always a good idea to be able to identify the perp.  Now if only we could get the cops to bring em’ in…

rocker's picture

Agreed.  Just terrific stuff Zaknick.  It is important to realize how we got where we are and might go.

kumquatsunite's picture

I love Ben Bernanke, and it seems that I spend a lot of time defending him. Let him who wishes to throw a stone at Bernanke answer the following questions:

1. Do you now or have you ever lived in a house that was payed for with a zero down (or zero plus extra monies to have fun with! yee haw!) loan?

2. Do you now or have you ever wanted to go to the store and have the cash registers working so you can buy your kiddies milk?

3. Do you now or have you ever created a financial system, complete and totally working in all manners, that can totally replace todays? 

One little bearded man attempting to clean up the mess of a bunch of putzes who decided to play poker with the future's chips. 

If you have children, or grandchildren, this should tick you off immensely.

blunderdog's picture

It's cute, and for sure it has no effect whatsoever on someone here who doesn't have kids.

James's picture

Hey Intelectual Chaos you stole my avatar!

owensdrillin's picture


Excellent post David. Best I've seen in a while.

DavidPierre's picture

 The Great Silver Debate...

I would love to know where the silver market sentiment data is coming from. It seems every widely circulated commentary on silver these days is extremely bearish. The silver stocks have been selling down for most of the month and it is hard to find an investor that thinks silver can sustain this price range.

However there is a disconnect that is underway that has been have expected for a long time. All of those who are bearish point to the spot silver price to support their case.

I question the term 'mania' to discuss silver because hardly anyone actually owns any silver and the silver stocks are trending lower for the short term.

Nothing but quotes from such luminaries as Nitwit Nadler and poor old Ned Schmidt who have been screaming the silver bubble story since it traded at $30, and even clueless Chris Ecclestone get repeated to suggest the fair value of silver is only $30.

Do not take anything these clowns have to say seriously.

Since when silver was below $10 the commentary stated that the market is never wrong and that the low price is a sign of abundance. Well now that silver has moved up to more reasonable levels, the same guys are all calling a bubble.

I thought the market was never wrong? None of the discussion even considers the possibility of a short squeeze in the futures market, or a real shortage of the metal.

None of these bozos that point to wild speculation ever discuss the wild shorting spree that has contained the metal.

All the time about irrational spec buyers but is it not even more irrational to be wrong about the trend of a metal and still pile on more shorts as the position blows up by hundreds of millions of dollars?

The price level that silver has reached seems high in the context of the lows that were endured at the bottom of the bear market. However, why should silver be the only commodity that has NOT broken to new all time highs in this bull market?

And on a fundamental level, I doubt that the $50 range is going to suddenly be the magnet to increase supply. Every silver miner was running flat out when silver broke above $25. There is not one silver producer on the planet that can easily increase production just on the basis of the price rise. On the contrary, some producers have been hedging forward sales into this rising price, which does not produce one single ounce of new silver.

And on a related topic, corrupt Mexican cops have all been hired by the SEC!

Mexico has a tradition of cops that are paid not to see things and so they are ideal for the job. How else to explain the failure to investigate obvious market rigging operations.

It does not take a genius to spot that silver stocks have been hammered the day before every COMEX margin increase. Every time, and usually when silver is rising strongly prior to this action, the silver stocks are hit hard. THEN the news comes out about increased margin, usually followed by downside pressure on silver itself, allowing the new shorts to cover easily on high volume trading.

This scam is so easy to spot and one need only pull the trading tickets on the larger silver stocks on those specific dates prior to margin increases to identify and prosecute the criminals. I doubt anything will ever be done to protect investors on this or any other scam in the PM sector. So much for the free and fair markets.

At the end of the day, the fundamentals are going to determine the longer term trend for silver.

Those who believe there is abundant supply and irrational speculation on the long side will have sold and gone short. Those who believe there is an acute shortage of the metal will continue to accumulate and will await a resolution to the counter trend sell off in the silver stocks. The rhetoric flying around has certainly attracted the attention of the market but if there is indeed a silver shortage, then the price of silver will run much higher before all is settled. There is plenty of silver bullion still around, but not for sale below $50 and those who have been shorting against this move may find it the most costly mistake they ever make.

jeff montanye's picture

there are the unparalleled (on a global level) fundamentals of the first time "modern central banks" oppose a deflationary depression combined with the inflation adjusted six hundred fifty year price range of silver:  $800 in the late 1400's (high) to $5 in the late 1900's (low).  nice to know one is getting in near the low. 

StychoKiller's picture

Pertinent market fundamentals:

1. US Govt spending cuts -- virtually non-existent!

2. Fed continuing to expand the # of FRNs via QE -- check

3. Housing prices STILL trending lower -- check

4. Dollar Index still going spelunking -- check

5. Price of Oil and other necessary commodities talking in a funny, helium-affected voice -- check

But somehow, we're SUPPOSED to believe that Au & Ag are in a bubble!  I was born in the morning, but it wasn't this morning!

DosZap's picture

At the end of the day,holding either will be a major plus.

Both, or one...............will beat the hades out of neither.

dark pools of soros's picture

let it blow up...  I'll sell an oz of gold when it pays off my house...