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Friday, December 3, 2010

Silver Round Shortage?

This article by Max Keiser was interesting. Allegedly, JP Morgan Chase has a huge naked short position in silver futures. Max Keiser says "If everyone living in the USA buys one ounce of silver, and takes physical delivery, then JP Morgan Chase would be unable to cover its short position and be bankrupted." The COMEX would also be bankrupted, via a clearing default. The COMEX should not allow one bank to take a huge naked short position. However, as the Hunt Brothers learned, the banksters make the rules.

For example, the COMEX could declare "Instead of settling futures with silver, you can settle them with the FRN-equivalent value. If you wanted actual physical silver, that's just too bad for you." They have done that in the past, when there was a risk of clearing default.

The Federal Reserve's "print money" trick won't work, provided people are demanding actual physical silver. Unless we're in the final stages of hyperinflation, people will sell their silver for a high enough price. During hyperinflation, people won't sell tangible assets for fiat paper, no matter what the price.

Many silver dealers buy directly from miners. They don't bother with the COMEX, knowing it's a scam.

However, "You should buy silver, and take physical delivery, to bankrupt JP Morgan!" is invalid reasoning. You should buy silver and gold because it's the best way to protect your savings as the State collapses. The banksters will be bankrupted if people refuse to keep their savings in State paper, but that's a secondary benefit.

JP Morgan Chase is the custodian for the SLV ETF. If there's a silver default by JP Morgan and the COMEX, there's a good chance that SLV shares would also be worthless. That's the reason you take actual physical delivery, rather than buying paper or an ETF.

At the end of 2008, the "official" price of gold crashed. At the same time, dealers had no inventory. The COMEX price of gold was low, but if you wanted to buy 1 ounce rounds, nobody had any.

As the State financial system collapses, the discrepancy increases between the "official" price and the price at which you can actually buy physical.

The 2008 physical gold shortage occurred at a time of crashing "official" gold prices. Many people saw it as an opportunity to buy gold cheaply, but dealers ran out of inventory even while the "official" price was low.

Right now, many silver dealers have a shortage of 1 ounce rounds. This occurs at a time of skyrocketing silver prices. That's a contrast to the 2008 gold round shortage, which occurred at a time of crashing gold prices.

When I was in grad school, I calculated my effective hourly salary was $15/hr. If you calculate salary-per-hour in gold or silver, I'm paid much less now compared to when I was a grad student!

The FRN-denominated price of silver is skyrocketing. The gold/silver ratio has decreased from 65+ to under 50. Even though the price of silver is skyrocketing (both in terms of fiat and the gold/silver ratio), people are still buying. It is very interesting, that silver is skyrocketing and many dealers have no inventory. Is this a sign of the final hyperinflation and collapse of the dollar? Are more people realizing that fiat money and State paper investments are worthless?

One of the best ways to protest State abuse and bankster abuse is to buy gold/silver and take physical delivery. You protect yourself from theft via inflation. You make it harder for State parasites to have a stealth tax increase via inflation. If you keep your long-term savings in gold and silver, you avoid subsidizing the banksters via inflation. Gold and silver are the hardest investment for State parasites to confiscate.


Dan said...

It is also a way to be American, to act as a patriot. Thomas Jefferson fought against Central Bank, and Martin Van Buren with Andrew Jackson organized the Democratic Party to destroy the Central Bank, and they did.

Traitors like FDR and Wilson made 3rd Central Bank (covertly named Federal Reserve) possible with the intent to fleece the America and Americans, to destroy the very idea of Liberty from within.

Hold metal, be American!

FRNs are not mandatory. They are offered to us, with a hope that we would behave like traitors. Our proper money is Gold/Silver coins. This is why they are still minted today. FRNs are alternative currency of a private bank. They have a right to exist. I still do not understand how did the government managed to print "legal tender" on FRNs, because, technically they cannot demand anyone to accept an alternative tender but Gold/Silver.

FSK said...

Actually, I consider the National Bank Act during the US Civil War to be the 3rd central bank. The Federal Reserve is the 4th central bank. The National Bank Act was a huge regulation. Combined with limited liability incorporation, the National Bank Act caused the crises that led to the creation of the Federal Reserve.

Rothbard is the best source for the National Bank Act.

Anonymous said...

The trouble with gold and silver, is that if you go into a supermarket in a city they will only accept cash or credit/debit cards.

Given oil will last, I don't know, 5 - 30 years, the system won't collapse anytime soon.

After oil, cars and trucks could move over to natural gas to spin things out a bit more.

I don't think the system will crash in the near future, but more and more people could get more and more fed up of more and more taxes.

In the UK taxes are going up (student loans have just got nastier), VAT will go up next year, but services are being cut back.

The politicians still manage to hire their friends though.

Many decades ago one British Chancellor gave up one-fifth of his estate to the Treasury to help out!!! Now the current Chancellor's family sets up a trust to avoid inheritance tax.

Britain used to have honourable politicians, now we just have short-term clowns.

Our Prime Minister used to work in public relations. That says it all.

Before the election the television clowns said how well he did at university.

HA. HA. Yes, doing well at university is good, but really couldn't they find anything else to say about him.

He must be in his forties. Surely David Cameron has managed to do something useful after leaving university!!!!???

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