April 29, 2008 by david.pennington.

by Jim Sinclair

Media has convinced the public that the Fed will go hawkish, first by decelerating the drop in interest rates. The deceleration has been attributed to the Fed having done the right thing.

Media has convinced the public that the ECB will reduce interest rates now faster than the Fed, thereby boosting the dollar versus the euro.

Although the business statistics are negative, the media has held out the carrot that it takes six months for the Fed’s action to materialize in the economy so all will be well in six to nine months.

The idea that the credit crisis is over is the message that firming financials are communicating as media supports that position.

Media has declared gold as DEAD.

90% of the above is raving BS. There is no way the Fed can go hawkish without causing, via the equity market, the revelation that nothing has changed for the better. There is no mention of the impact lower Federal Tax revenues will have on the US Federal Budget deficit and its negative weight on the dollar. There is no mention of the desire of many central banks to diversify out of the dollar when a short covering rally presents itself.

I feel whatever gold has to do on the downside will be covered by the end of the first week in May. 

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April 28, 2008 by david.pennington.

If you work for wages (or live on a pension), consider this: If every American said “No, thank you” to President Bush’s stimulus check and refused to cash them, the value of the dollars in your pocket right now, in terms of their purchasing power would go up by a factor greater than the face value ($600) of the stimulus check. In other words, if you didn’t spend these checks, you’d be the richer for it.

The reason being that America does not have a hard-money economy; it’s a debt-based fiat currency economy. All the money in circulation in America has been borrowed and then re-lent. So borrowing more money ($168 billion for the stimulus package) and then re-lending it to Americans, as Bush is doing, only increases the debt load and debases the value of the currency outstanding (against a backdrop of stagnant wages and minuscule interest rates for savers).

If an American was planning to spend $40,000 this year on food, clothing, shelter, health, and various other expenses and they were hoping to defray some of that cost thanks to Bush’s stimulus check, understand that by simply adding another $168 billion of debt (the cost of the stimulus package) on top of America’s current multi-trillion debt load will continue the Bush-Paulson-Benanke trend of debasing the purchasing power of your money and therefore raise the price of goods and services by more than the $600 “gift” (without a commensurate rise in wages or increase in interest paid on savings).

This is why America’s debt problems won’t go away. Every dollar spent adds debt and spawns more fiat currency issuance, which has the effect of decreasing the purchasing power of the U.S. dollars in your pocket. Bush tries to make up the difference by borrowing even more; borrowing $340 million a day to fund the war and close to $3 billion a day to cover U.S. operating expenses, not to mention Wall Street borrowing more than $30 billion a day to keep its own Ponzi scheme going. All this borrowing keeps alive the vicious financial spiral trending lower towards permanent currency debasement and possible sovereignty loss.

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April 14, 2008 by david.pennington.

You need to realize that the Commercial Traders (COT’s) in the paper market (COMEX) are short large amounts of silver, estimated at over 100 million ozs. This is not a problem as long as the speculators or tech funds who are long silver are willing to cash out their contracts. However, if they ever required the shorts to deliver the actual silver per their contract, they wouldn’t be able to purchase enough silver in the physical market to cover their shorts, and silver would skyrocket overnight. We are close to that happening right now. The recent price correction was orchestrated to provide the shorts with an opportunity to cover their positions. The shorts certainly are aware of the coming shortage. They know too that the silver ETF, SLV, is unable to buy enough physical silver to comply with their required holdings. At the retail level, once silver started to correct, huge amounts of money that was waiting on the sidelines entered the market and bought up all the Silver Eagles first, followed by a run on all silver except the 1000oz bars. The 1,000 oz bars are what is used by the industrial users in the commercial application of silver. Once they become scarce, it’s “ballgame over”. The big dealers can sell unlimited quantities of  manipulative paper silver contracts created from thin air; but, they can’t sell real 1,000 oz bars unless they have them. If they don’t have the real goods and there is a surge in demand for the real bars, the jig is up. The growing evidence of a silver shortage is becoming more obvious each day. The world does not know how to deal with such a shortage because one has never existed like this. I remember predicting several years ago that the time will come when it will be impossible to buy silver. I must admit I didn’t think it would happen this soon. When people ask me how high I think silver can rise, I tell them it can go as high as the price of gold.Silver Eagles are by far the best way to hold silver. They are liquid, leveraged to the price of silver and readily useable in the event of an emergency. My advice is to buy Silver Eagles. I believe when the big silver shortage comes and the people in the Far East recognize the situation they will bid up the prices of Silver Eagles to many times whatever the price is at that time. By that time, the US Mint will have long stopped producing Silver Eagles, creating a scarcity in what is already a rare commodity.I’m hoping the shortages we are seeing now is not the “real” shortage. We still need time to accumulate more silver at today’s cheap price. When the “real” shortages come, you will see silver prices rise $20 - $30 in a week. Just imagine Billions of dollars attempting to purchase just millions of Silver Eagles…and that’s just in this country. When those in China and India understand the “real” shortage coming, because today they still don’t a clue, how will they react?Someday, people will look at Silver Eagles as masterpieces bought at garage  sale prices. If you have young children or grandchildren, put some masterpieces away for them, but don’t tell them about it until later. They will remember you and thank you forever. 

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April 9, 2008 by david.pennington.

There are many small investors like you and me who are in love with silver. As a result, they cleaned most of the shelves in retail stores, of Silver Eagles and bullion investment products, excluding the 1000 oz bars. This shortage in the retail sales of silver is the first sign that our reason to buy is correct and the big increase in Silver price is not far off. It also tells us that the paper pushers in COMEX are selling silver short in an attempt to keep the price as low as possible.It’s very interesting that nothing on CNBC or other TV stations, or big newspaper mentioned the retail shortage of silver. I can tell you if it was a retail shortage in gold, you would hear about it 24/7. And probably the prices would double in a week, not like in silver where the prices went down in the face of a shortage.Contrary to my argument that I would like to see the naked shorts be punished, I say it was good luck for us that the naked shorts controlled the market and unintentionally produced the opportunity for us to buy more silver at garage sale prices. In my eyes the naked shorts, are dead fish, and in time they will be forced to cover and buy back their position. For the time being we will have controlled markets. But we must look ahead, and if there is not enough silver for the retail investor, what will happen when the end-users will need silver? In my opinion, it’s only a question of time when we will run out of 1000-ounce bars. The biggest wealth is coming to USA. Small retail investors are grabbing all the silver they can and today, in my opinion, we have 70-80% of all the free silver in the world, in private hands in the USA. I am getting excited that there will be so many future millionaires in our country. I still see Silver Eagles as the best buy but don’t ignore bullion in any size. The conclusion from the retail shortage is: Don’t believe the enemies of silver who say there’s a glut of silver in many places. What places?  The empty shelves of silver and the full shelves of gold tells you that silver has more value then gold right now, if not in today’s price, then in the future. I hope that the accumulation of silver here in USA will continue, and that it will create much real wealth for our fellow citizens for the betterment of our country. And don’t forget that this retail shortage, even if it is only temporary, is still very significant and pinpoints how tiny available stocks of silver really are and how fragile are the supply lines. Just wait until the people in China and India wake up to the silver shortage in America - they will take silver for any price. 

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April 1, 2008 by david.pennington.

by Michael Pennington

My Precious Metal friends, don’t be fooled by the recent weakness in the price of gold. We fully expected this correction in early Spring. The severity of the correction is a result of short covering strength in the US dollar. This, in turn, is predicated by the Paulson bailout program – the $4 billion raised by Lehman Brothers and the conclusion that the credit problems are behind us. The fact is the credit problems are NOT BEHIND us. The US dollar problems are far from over. We have yet to experience the commercial real estate problems, the credit card problems, re-valuing overstated derivatives and other bad loans which total close to $1 trillion. So for those pundits who keep calling the bottom to this recession , I say they are not being realistic. When you consider the US budget deficits, the sub-prime loan problems, the Bush tax giveaway, the Bear Sterns bailout and the list goes on, my friends there has to be consequences to these huge increases in liquidity. All of this liquidity was created by the FED to craft the appearance in the short term that they can control all the plates spinning in the air. They want to paint the illusion that there are no more investment or banking companies needing to be rescued. The real truth is that many problem banks are raising capital from the Middle East and borrowing billions from the bailout loan window recently made available by the FED. 

The financial reform package unveiled by the Treasury Secretary Paulson on Monday morning is the next big step to reduce capitalism in the U.S. Recently, the FED studied how the banks of several socialist countries nationalized their banks. The FED is aware of how severe the global financial crisis is and they need ever more control over all aspects of financial services to keep their fiat scam afloat. Regardless, it’s slipping through their fingers. Now they want the power to “regulate” (manipulate) the stock markets, the commodity markets, interest rates, insurance, mortgage lending, credit cards, i.e. all aspects of your financial life.  We have already lost many of our personal freedoms in exchange for the safety against the invisible enemy called “terrorism”; now we stand to lose all of our financial freedoms in exchange for the safety of not having to suffer through a normal recession anymore. Like me, I hope all of you will fight these reforms with everything within our possibility.

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