August 25, 2008 by david.pennington.

by Michael Pennington 

FREDDIE, FANNIE and THE FEDIt seems to me that the FED is way too close to the financial markets, Wall Street and the elits in charge of them. They are too quick to jump in and respond to their pleadings for help using taxpayer funds that our politicians offer on a platter. The thing that bothers me the most is that the people being “saved” are the very ones who got rich off the backs of the public and their employees. Is there any question why all this greed and corruption continues? Those responsible for it are the very ones being rewarded for their corruption. Our markets will never be cleaned up until this changes. 

THE  SILVER and GOLD PRICE  MANIPULATION EXPOSEDMost of us are well aware now of the price suppression scheme orchestrated by the U.S. Central Bank. Well-known silver analyst Ted Butler deserves much of the credit for exposing the many illegal practices used to implement this fraud. In commentary published today, Butler examines data from the U.S. Commodity Futures Trading Commission and reports:“As of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. “Between July 14 and August 15, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38 percent. “For gold, three U.S. banks held a short position of 7,787 contracts (778,700 ounces) in July, and three U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an 11-fold increase and coinciding with a gold price decline of more than $150 per ounce. “As was the case with silver, this is the largest short position ever by U.S. banks in the data listed on the CFTC’s [Internet] site. This was put on as one massive position just before the market collapsed in price.”Yet, the regulators turn their heads and ignore the most blatant evidence that the FED is orchestrating through their brokers such as Goldman Sachs, the late Bear Stearns and now their commercial banks who carry out their bidding to paper sell silver and gold into the market to drop the price. In spite of these derivatives being extremely risky and in spite of the fact many of these financial institutions are already insolvent, they know they will be bailed out by the FED regardless of the huge losses possible. How much more corrupt can things get? 

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August 19, 2008 by david.pennington.

by Michael Pennington 

Buying on the Come

Several issues I would like to address this week. The first is that I have heard of many investors buying from sources who do not have the product in inventory, but are promising delivery at some future date. I hope to convince you all that this is not in your best interest. I know of horror stories where the purchaser has waited 4-6 months and are not able to obtain a refund without paying a significant termination fee. When you buy “on the promise of future delivery” you are actually selling the metal short. The large dealers end up hedging to protect their price by selling a future’s contract short to protect his sales price  in the event of a price decline. This position actually drives the price of the metal lower in the short term. And if you have to wait 30-60-90 days for silver from any seller, it means they are selling what they do not have, and hope to get it from someone else that does not have it today either!  That means they are short, (they owe you silver) that they do not have!And if there is a “regular” 60 day delay, where they have you pay for it all up front, instead of a tiny 5% deposit down payment, then they are “floating” on your money, like you gave them an operating loan! The honest dealers will only sell you what they already own. DO NOT FALL INTO THIS TRAP!

The Market Shortage

While today’s metal shortage is real, it should not last long. Markets tend to be corrective and this manipulation lower will also correct soon. The market is very tight for physical metal. Johnson Mathey is the largest producer of 100 oz silver bars and they reported today they are 300,000 ozs behind filling orders.As for Silver Eagles, one authorized distributor has speculated that Mint may not produce any more 2008-dated coins and will commence production of 2009-dated Silver Eagles.  If so, no new Silver Eagles will be available for delivery until January 2009.
Still, another distributor is confident the Mint will produce more 2008-dated Silver Eagles in the next few weeks.How is this manipulation/intervention going to end? Since prices between the physical and paper metals have disconnected indicates to me they are failing as we speak. The only way this will end is in default. We are seeing that happen now as deliveries of physical are being delayed. There is so much more paper metal than physical metal it will have to drive prices of physical higher. The laws of supply and demand can only be broken for a short time.  The reality is that silver is scarce.  Buy it if you can find it!
 
HOW LONG WILL THE DOLLAR RISE?

The media is now busy promoting the idea that the dollar will continue to rise against other world currencies. This is normal propaganda but before we just accept this at face value, we need to question how the following facts will affect this claim:1.    The U.S. deficit continues to grow at epidemic proportions;2.    The FED has now implied they will bailout European banks as well as their own; the ECB is not permitted by law to bailout any of their own financials, so to avoid possible collapse, the FED has stated they will help their foreign counterparts;3.   If Washington really intended to stabilize the Dollar or, more ambitiously, to push it up against the other currencies, there would only be a couple of ways to accomplish this: raising significantly the Fed’s interest rates, and lowering drastically the pace of money printing. But if the government decided to implement this type of policy, the US economy would stop dead a few weeks. We would see the real estate market fall to zero by lack of affordable credit as a result of soaring interests on Adjustable Rate Mortgage loans, consumption would become negative (i.e. shrinks back each month), corporate failures would multiply exponentially, Wall Street would collapse under the burden of innumerable debts.4.   Household debt is now 131% of disposable income, compared with 93% at the top the dotcom bubble, 79% in the property boom of the late-1980s, and 62% at the end of the 1970s.Such a series of events, sure to happen if Washington implements a voluntary policy of dollar-rescue, is probably unacceptable to the US authorities. Therefore, apart from talking – and further self-discrediting – they cannot do anything. The method used in the past decades is no longer available: no one will accept to buy large amounts of Dollars in order to rescue the US currency if some voluntary policy as described is not implemented by Washington. As they will not do it, the rest of the world will draw its own conclusions and continue to diversify out of the U.S. Dollar. 

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August 14, 2008 by david.pennington.

NO MORE SILVER EAGLES – AGAINby Michael Pennington 

An obvious question is where have all the silver eagles gone? As of today, none of the large suppliers of bullion dealers, or the dealers themselves have anymore silver eagle boxes. I have said it before on this forum and others that the day is coming soon when it will be impossible to buy silver at any price. Once again, we have witnessed blatant manipulation on the part of the FED and their elitist owners in the past several weeks driving the price of both gold and silver to dangerous low levels. They do this simply by selling the metals short in the “paper market” intensely enough to convince speculators that they should sell their long positions and the route is on. The reasons, as always, are to convince people that their dollar is solid and that there is no inflation eating away at the middle class assets. This is motivated so they can continue their devastating policy of creating more dollars in attempt to keep their credit rich, fiat system from collapsing. It will inevitably, but in the meantime they have to keep the sham alive. Just this week, the FED announced they have loaned troubles banks another $25,000,000,000. They have already “loaned” Freddie Mac and Sallie May $50,000,000,000 and yet unbelievably they allow these GSE’s to still pay their shareholders a DIVIDEND that comes from the money borrowed from the American taxpayer.I mentioned the danger of lower prices. Everyone is aware of the huge short position in silver. It is the largest short position in any commodity in our country’s history. It is more than one year’s full production. The regulatory officials turn their heads and allow this illegal activity to continue. This past week Silver dipped below its cost of production. Two of the nation’s largest silver miners just reported losses for the second quarter. If they are losing money when silver was at $17.50 per ounce, what do think will happen at $14.50 per ounce? When the mines stop producing, silver is still needed for many manufactured goods and processes. Prices will escalate rapidly and then the millions of ounces short will be squeezed, probably into default.Remember, these markets exist on fear and greed. When prices are falling, fear takes over and visa versa. But you need to have the courage of your convictions. DO NOT BELIEVE WHAT YOU HEAR IN THE MAINTREAM MEDIA. Believe what you see with your eyes. Know the fundamentals and stick with them. Manipulation has always been a short term strategy. The markets eventually react as they should. The dollar my friends is toast. Everybody else in the world knows it and most of the world’s largest nations are doing whatever they can to diversify out of dollars. The Euro was muscled off the near $1.60 level by more than $10 billion in currency market intervention, along with Trichet’s verbal intervention stating that the economic environment might take precedent over inflation. Today as he reverses himself by making inflation the primary concern, more intervention is taking place to make the Euro look weak in the face of a statement that should have had the opposite impact.When evaluating your investments look at the return/risk over a given period. Any clear minded individual aware of the facts will conclude that gold and silver, but especially silver, are among the best investments today at these prices.

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