Wednesday, February 29, 2012

Sale Prices On Gold And Silver, While Supplies Last!

The ECB just created nearly 3/4 of a TRILLION dollars, and handed it to the financial system...why would anybody sell their Silver and Gold?

ECB hands out $712-billion in loans to banks

European banks gorged themselves on a second helping of cheap European Central Bank loans as the ECB moved with alacrity once again to avert a banking liquidity squeeze and take the edge off the sovereign debt crisis.

On Wednesday morning, the ECB lent €529-billion ($712-billion U.S.) of 1-per-cent money to 800 banks, which was slightly above the consensus figure but well below one or two predictions that as much as €1-trillion would be soaked up. In the last auction, in December, the ECB loaned €489-billion to 523 banks.

The loans, known as the long-term refinancing operation (LTRO), were introduced by then-new ECB president Mario Draghi late last year as the bank’s prime effort to prevent a Lehman Bros.-style banking collapse on home ground. While the ECB had hosed out cheap loans in the past, under Mr. Draghi’s predecessor, Jean-Claude Trichet, they were short-term loans. The new loans have been for an unprecedented three years.

The December LTRO was widely credited with triggering a bank rally and bringing down the yields on the sovereign bonds of highly indebted countries, such as Italy. That’s because the banks, under the urging of French president Nicolas Sarkozy, used some of the loans to buy government debt.

Economists and analysts attached no particular significance to bigger size of the second LTRO operation. There is no doubt that more banks took part on Wednesday because the EBC relaxed loan-collateral requirements, allowing hundreds of smaller banks to participate in the auction.

Italian and Spanish banks were the biggest consumers of the cheapie ECB loans in December; together, they absorbed €215-billion of ECB liquidity. Economists think the Italian and Spanish banks were the leading borrowers again today. Greek banks were probably only minor participants in today’s auction, because of the ECB’s decision this week to suspend the use of Greek government securities in ECB refinancing operations.

Since Wednesday’s ECB auction included funds rolled in from shorter-dated auctions, a net €314-billion of new liquidity was added to the banking system. In December, the equivalent figure was about €193-billion.

Economists generally put a positive spin on Wednesday’s auction.

Martin Van Vliet, of ING Financial Markets, said “in our view it is a Goldilocks outcome: not overly large as to generate concern about the fragility of the European banking system, but high enough to pre-fund a substantial share of maturing bank debt and spark more buying of Italian and Spanish paper.”

The euro was down slightly against the dollar after the EBC auction. The FTSE was flat but Eurofirst 300 was up 0.4 per cent.

The ECB has hinted strongly that no third LTRO is coming, because of moral hazard. Some of the central bankers, notably those from Germany, fear that the cheap loans are effectively a form of subsidy. In a note published last week, Deutsche Bank’s economists said that “bank restructuring is undermined by an overly generous provision of funds from the central bank.

“Instead of going through painful restructuring, banks may use the cheap central bank money to fund large-scale purchase of government bonds in the hope to use the profits from the carry trade to strengthen their balance sheets.”

Over the past 11 weeks, the ECB has created an additional 10% of the Eurozone’s entire money supply...Why would anybody sell their Silver and Gold?

Bumbling Ben Bernanke has created over $2 TRILLION over the past 6 months and because "he" sees no more reason for more you are going to sell your Silver and Gold?

This might make a great headline for those opposed to the TRUTH that Gold represents, but it is NOT a reason to sell your Silver and Gold!

Gold down 5 percent, biggest one-day drop in 3 years
(Reuters) - Gold fell 5 percent to below $1,690 an ounce on Wednesday for its biggest one-day drop in more than three years, as speculation that central banks might be done with easy monetary policies led funds to exit the bullion trade.
Gold fell nearly $100 and silver was down $3 from session highs. Losses started to snowball at 10 a.m. EST (1500 GMT) after U.S. Federal Reserve Chairman Ben Bernanke did not mention another round of monetary easing was imminent.

Another round of monetary easing wasn't imminent?  What in the hell do you call the $713 BILLION the ECB just force fed the financial system this morning?

When Ben Bernanke talks, why do people listen?

Bernanke Tries Talking Down Commodities

February 29, 2012, at 1:26 pm
by Dan Norcini in the category Trader Dan Norcini | Print This Post | Email This Post

Click here to visit Trader Dan’s website…

Dear CIGAs,

Today was Fed Chairman Bernanke’s chance to testisfy before the Congress’ Financial Services Committee. Here is a quick synopsis of his comments as I see them.

"The economy is getting better based on what we can see of the employment numbers but it is not growing at a fast enough clip to justify any immediate change in our accomodative monetary policy. The uptick in hiring has been helped by this policy and any change to it at the present time is not warranted. Real Estate is still a concern. Us fiscal condition is dire and faces a serious challenge at the end of this year. Inflation is not a concern although temporary rises in energy prices bear monitoring".

There you basically have it.

Based on this testimony, gold and silver were murdered. The supposed reason? – We are told that traders were expecting QE3 to be imminent and were disappointed because the usually dovish Bernanke did not sound quite as dovish as before. Thus the metals were hammered mercilessly lower.

Excuse me – but as a trader who watches these markets each and every day for more hours than I would prefer anymore, I have not seen any analyst explain the reason for the heretofore rally in the metals as traders EXPECTING AN IMMINENT QE3 program to launch.

The reason for the rally has been expectations by the market that Central Banks would keep the liquidity spighots open for the foreseeable future (near zero interest rate policy coupled with QE out of Europe and the UK) and thus create an environment in which there was little opportunity cost for buying the metals. This has been generating RISK TRADES in which traders/investors buy both stocks and commodities and generally sell off the Dollar, which was particularly pronounced after a rush back into the Euro once traders were convinced that the immediate fallout from the Greece debacle was past.

Comments this morning trying to explain the sell off in gold mentioned the failure of the metal to make it through the $1800 level and downside stops as the culprit but ironically they are deathly quiet in regards to silver, which only yesterday had staged a MASSIVE UPSIDE BREAKOUT on strong volume out of a congestion zone. Yet today we saw a nearly 8% wipe out in silver which completey erased yesterday’s breakout and then some.

Click here to read the full article…

Following today's announcement by the ECB regarding the creation of $713 BILLION, Gold and Silver prices were firm and beginning to rise.  At 7:55AM est Zero Hedge commented:

Silver Surges 4.5% To Over $37/Oz On "Massive Fund Buying"

Gold rose 1% in New York yesterday and closed at $1,783.90/oz. Gold rose in Asia to a high of $1,790.16 it’s highest since mid November then edged down.  Europe this morning saw sideways trading until unusually volatile trading around the London AM fix saw gold rise from $1785.oz to over $1790/oz at 1030 GMT and then fall quickly to $1783/oz.

Spot silver has gained another 0.5% to $37.05 an ounce, after surging 4.5% yesterday once it rose above resistance at $35.50/oz. Silver reached a 5 month high of $37.21 but remains more than 30% below its nominal high in of April last year of $48.44.

Over 800 European banks have taken €529.5 billion from the ECB today after taking €489 billion euros at the first tender in December. The ECB’s 3 year lending is now near 1 trillion euros ($1.35 trillion) and the ECB’s balance sheet looks increasingly precarious.

Although the flood of paper has been credited with fuelling a rally on Europe’s distraught bond markets and safeguarding the region’s banks, it is another exercise in kicking the beer keg down the road as it fails to address the fundamental issue which is the insolvency of many European banks and many European nations and the obvious risk of contagion from that.

The continuation of ultra loose monetary policies increases the risk of inflation which will benefit gold which is an excellent inflation hedge. Extremely low yields on deposits and “risk free” sovereign debt means the opportunity cost of carrying non yielding bullion remains very low.

Spot silver gained 0.4% to $37.05 an ounce, after surging 4% and hitting a 5 month high of $37.21 in the previous session.

Silver as ever outperformed gold yesterday and traders attributed the surge to “massive fund buying” and to “panic” short covering. Some of the bullion banks with large concentrated short positions covered short positions after the technical level of $35.50/oz was breached easily.

Massive liquidity injections and ultra loose monetary policies make silver increasingly attractive for hedge funds, institutions and investors.

This time last year (February 28th 2011) silver was at $36.67/oz. Two months later on April 28th it had risen to $48.44/oz for a gain of 32% in 2 months.

There then came a very sharp correction and a period of consolidation in recent months. Silver’s fundamentals remain as bullish as ever and the technicals look increasingly bullish with strong gains seen in January and February.

Very bullish is the fact that silver also remains more than 30% below its record nominal high 32 years ago in 1980 and more than 75% below its inflation adjusted high of $140/oz in 1980.

The gold-silver ratio dropped to its lowest level in 5 months, after silver rose more than 12% so far this month and an enormous 34% this year, outperforming other precious metals.

Rising holdings of silver-backed ETF’s also indicated growing investor interest in the metal. The overall silver Exchange Traded Funds holdings rose to 491.079 million ounces, the highest since last May.

Spot platinum gained nearly 0.5% to $1,722.24, as investors await the latest in Impala Platinum's dealing with an illegal strike that has disrupted production at Rustenburg, the world's largest platinum mine.

Coincidentally, at 10AM est as The Money Printer In Chief, Ben "I lie like a filthy doormat" Bernanke took a seat before Congress to tell our "fiscally inept" legislators that pigs look better with lipstick on them, Gold and Silver suddenly disintigrate  Yeah like this guy is going to stop printing money in an election year...inflation is barely 2%...and the economy is chugging along.

The criminals that inhabit the CRIMEX want you to believe just that:

click to enlarge

And you should sell you Silver and Gold?

LTRO – Fatter than El Gordo
By: Adrian Ash, BullionVault

Gasp at the sheer size of El Tro, the €1 trillion money storm raining down on Europe's banks...

The FATTEST PRIZE in the world's biggest lottery, El Gordo – the "Fat One" – just keeps getting fatter, according to its promoters.

But even the fattest total of prizes to date – some €2.5 billion at Christmas 2011 – looks a tin-ribs next to El Tro, the storm of money now raining down on Europe's banks.

Wednesday's Long Term Refinancing Operation took the grand total of giveaway money to more than €1 trillion, pumped out by the European Central Bank and known by the acronym LTRO. It is christened El Tro by us here at BullionVault today via the Catalan for "thunder". Because that's just what people keep calling it – El Tro.

"You can't argue with [that]," reckons one Credit Agricole analyst, nodding at the €530 billion which El Tro will hand to commercial banks when the latest chunk of cheap-money loans is settled on Thursday. But he should add two exclamation marks (¡the first upside down of course!) and do PR for the Spanish lottery's El Gordo instead.

Because El Tro – Europe's money storm – demands a far stronger sales pitch than that.

In just two operations in barely 11 weeks, the ECB has created an additional 10% of the Eurozone's entire money supply, lending out €3,084 for every soul in the 17-nation union. Throw in the non-Euro banks scrabbling to scoop up El Tro's gifts on Wednesday, and this latest offer was met by some 800 different institutions. Even the cash raised from shareholders by all US and Eurozone banks added together during the crisis of 2007-2010 fails to match the size of El Tro's gifts.

And make no mistake: the LTRO is a gift. Even if price-inflation subsides to average the ECB's annual target of 2.0% between now and start-2015, the central bank will make a loss of €44.7bn in real terms. Inflation stuck (or pushed above) the latest reading of 2.6% would cost the Frankfurt lenders nearer €62bn...a full 6% of the €1,018 billion now lent out in total.

Any bank looking to book an instant profit meantime can simply stick the cash into 3-year government bonds and turn their 1.0% annual cost into 1.10% with Finnish debt, 1.55% with Belgian debt...or a massive 5.41% per year with Italian debt. Hell, you could buy German Bunds and make risk-free money on anything above 6 years to maturity.

So c'mon! Everyone's a winner with El Tro. Except the central bank, of course. And the banks themselves, if Belgium, Italy or one of the rest fail to make good on their bond repayments. Which the banks already have a very clear interest in avoiding, seeing how they're backed by state guarantees, whether stated or implicit.

How does one play El Tro? To get a ticket you need a banking license inside the European Union. Then the central bank pings you an email, and makes you an offer you really cannot refuse:

Unlimited loans for 3 years at a cost of 1% per year!

Last December, the prize draw totaled €489 billion. This week the cash pay-out totals €529bn. Apparently that's your lot. ECB president Mario Draghi says today's giveaway was the last. But a trillion Euros will be a lot of money to find when the loans need repaying at start-2015, even though they'll no doubt be worth much less in real terms. We wouldn't bet against a new offer – and with fatter prizes – in the next couple of years. Anyone wanting to bet on it might think buying gold or silver a smart move. But they'll likely need nerves of steel, especially at first.

Just as with US and UK quantitative easing, buy-the-rumor, sell-the-news also applies to Europe's LTRO. Gold tumbled more than 3% on Wednesday, and silver slumped almost 9% at one point, despite the biggest 1-day deluge of money ever seen in history so far. But such volatility is to be expected, we're coming to learn. Trying to fatten the money supply of the world's largest economic region by 10% in one morning is sure to make everyone queasy. And net-net, quantitative easing and El Tro look very similar. The aim looks exactly the same.

Money is handed to banks on terms they wouldn't dare have imagined pre-2008. Officially, the plan is to boost lending to small businesses. The central banks all promise that this cash injection is only temporary (3 years for LTRO, undated for QE and clearly indefinite in the case of Japan) and will be withdrawn in future. A good chunk of it winds up in government bonds. Very little, if any, reaches what TV news anchors calls the "real economy".

"The idea that the long term repo operations have eased the supply of finance to small businesses in the Euro area is a myth," as Bank of England governor Mervyn King to UK politicians in London today.

"What it has done is to provide a source of funding to banks particularly in the southern member countries of the Euro area which were experiencing a bank run, enabling them to fund the withdrawal of funds."

Note that our Mervyn didn't say the loans were a round-a-bout way of keeping Spain afloat, even though Spanish banks – heavy players of El Tro the first time – accounted for 97% of the increase in Eurozone government debt held by all Eurozone banks in the 3 months to Feb. Because note too that, by the end of next month, the Bank of England itself plans to hold one-third of all UK government bonds in issue.

So pot, kettle and all that. And just as with the US Fed and Bank of England's un-ending queasing, so the ECB's unlimited loans look likely to become a permanent and regular feature for gambling fans.

Another day, another Fed and bullion bank intervention
Submitted by cpowell on Wed, 2012-02-29 18:22. Section: Daily Dispatches

1:24p ET Wednesday, February 29, 2012

Dear Friend of GATA and Gold (and Silver):

Interviewed today by King World News, Sprott Asset Management's John Embry discusses another smash in the gold and silver paper markets by their "manipulators," the bullion banks:

Market analyst and gold mining entrepreneur Jim Sinclair writes that today's action in gold is an "intervention" functioning as "window dressing" camouflage for more "quantitative easing" by central banks:

And MarketWatch quotes Richard Hastings of Global Hunter Securities as saying today's comments by Federal Reserve Chairman Ben Bernanke may have been "designed to take out some of the inflation in the industrial and commodity side of the markets right now, since the Fed does not want inflation to creep up and threaten its ultra-low rate policy at this time":

That is, more market manipulation by the Federal Reserve, market manipulation being, as GATA has been noting for many years, central banking's reason for being:

"And so we have come to an era of daily market interventions by central banks -- so much so that the main purpose of central banking now is to prevent ordinary markets from happening at all." (

Well, at least this manipulation and intervention are being acknowledged in public more often now. But don't ask GATA when they'll end or when foreign central banks and sovereign wealth funds will pull the plug on the operation by dumping U.S. government bonds and buying gold and commodities all at once. That portfolio rebalancing has been happening gradually for a long time, the plug will be pulled only when those foreign central banks and sovereign wealth funds consider themselves fully hedged, and they won't be tipping us off the night before.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Today legendary value investor, Jean-Marie Eveillard told King World News he believes central banks are desperate and they are intervening in the gold market.  Eveillard, who oversees $50 billion at First Eagle Funds, had this to say about the situation, “Usually I don’t have much to say for bullion regarding day to day trading.  But a move of $75 is somewhat striking.  Central banks acknowledge they intervene in foreign exchange markets.  They (central banks) sort of don’t exactly deny, but they are very quiet about the fact that obviously they also intervene in the gold market.”

Jean Marie Eveillard continues:

“For all I know that may be the case today (that central banks are intervening in the gold market).  Whether the fact that it’s the last day of the month is important or not, I leave that to traders to explain, if there is even an explanation there. 

I understand this morning that Mr. Bernanke said something to the effect that he didn’t see the point to having additional stimulus right now, although if necessary he would provide it....

“Investors have to remember that in only a couple of months the price of gold, up until yesterday, had recovered from $1,525 to $1,785, which is not peanuts.  Today we are just giving up a portion of that move.

But from someone who has a long-term outlook like myself, it used to be the Federal Reserve and the Bank of England that were printing money like there was no tomorrow.  Then the ECB did.  Now the Swiss National Bank is doing it too and indeed the Bank of Japan gives the impression they are joining the party as well.

Maybe the Japanese don’t like being alone in not joining the others, particularly since their economy has been flat on its back for almost twenty years.  They had also been complaining bitterly that the yen had been too strong. 

The other day somebody pointed out, and I have not checked the numbers, but somebody stated that over the past three to five years, the top five central banks in the world have increased their balance sheets by 70% of all of the gold mined over the past 3,000 years. 

To me if it’s true, and it doesn’t matter whether it’s three years or five years, it’s mind boggling.  To me it indicates central banks have been truly desperate over the past three to five years.  

They (central banks), of course, have been trying to offset the leveraging of the government debt.  They have been trying to stabilize matters because of the tremendous decline in the private sector.  They have been trying to avoid a return to the Great Depression.

But as the Austrians (Economists) like to say, ‘If you were stupid enough to let a credit boom go on too long, then once the credit cycle turns, which it did in 2007 and 2008, you have to be careful not to try to patch things up in the short-term.  Stabilizing the short-term causes tremendous danger to the medium and long-term.’ 

So with all of this as the backdrop, I wouldn’t worry too much about what happened today with gold and silver.”

Bob “The International Forecaster” Chapman is watching the precious metals raid and even he can’t believe the depth and depravity of the efforts the Elite are using to stop gold and silver’s rallies dead in their tracks. According to Bob, and we must agree, the raid will fail. It can’t work in the long term, the underlying fundamentals show that fiat currencies are going the way of the buggy whip and the floppy disk. This is just another part of the concerted effort to try and undermine our faith in precious metals and jack up the confidence in paper currencies/ assets. But just like the London Gold Pool of the 1970′s, you can’t change the course of a market with platitudes. The market always speaks truth to power.

Do you, dear reader, really believe that this pathetic and BLATANT "raid" by the Gold cartel via the CRIMEX is going to halt the demand for PHYSICAL Gold and Silver.  If anything this desperate attack on THE TRUTH is all the evidence one needs to own these Precious Metals to protect and insure their wealth.

And lest we forget, in all of today's whirlwind of Bernanke BS, today was First Notice Day for holders of CRIMEX March Silver contracts.  Clearly the banking cartel is coming up a bit short on physical Silver to meet delivery demands.  This more than anything likely explains today's raid on Gold, and coincident fallout in Silver.  For if EVER there was a reason to own these Precious Metals, the ECB just gave us a dandy this matter what that JACKASS Bernanke would "like you to believe".  Somebody has to finance the USA's 1.2 TRILLION Dollar deficit, and Bernanke is going to print the money despite ANY suggestions to the contrary.

16,310,000 ounces of Silver are standing for March delivery at the CRIMEX.  The total registered silver inventory available for delivery at the CRIMEX is 31.122 MILLION ounces.

Considering there are presently 65,443 May Silver contracts open at the CRIMEX, each representing 5000 ounces of Silver, 31.122 million ounces of registered Silver is chump change.  Those May Silver contracts represent 327.165 MILLION ounces of Silver that the CRIMEX OBVIOUSLY doesn't possess.  Is the CFTC aware of this little statistic?

Has demand for physical Silver overwhelmed supply?

PEOPLE!  700 MILLION ounces of Silver are mined GLOBALLY each YEAR.  How can almost 50% of  one year's mined Silver supply be promised under contract at the "just" the CRIMEX...IN JUST THE MONTH OF MAY?

Got Gold You Can Hold?

Got Silver You Can Squeeze?

It's Not Too Late To Accumulate!

Saturday, February 25, 2012

Is The Demand For Physical Silver About To Overwhelm Supply?

India predicted to import 5000 tonnes silver in 2012, price to exceed $60/oz 
Demand for the white metal in India is seen surging this year from last year's 4,800 tonnes and prices are expected to shoot up as a result says the Bombay Bullion Association.

This morning, Saturday February 25, 2011, Harvey Organ in a post on his Daily Gold & Silver Report commented on the growing disparity between supply and demand in the global Silver Market:

This week we have seen the Bloomberg report on the huge amount of silver imported into India to the tune of 5,000 tonnes or 160 million oz.  The total amount of silver
produced by all the miners throughout the world and including China is around 700 million ounces.  Demand for silver is a little north of 900 million oz with scrap silver playing the equilibrium card bringing everything into balance. The Canadian mints and the USA mints use 65 million oz of silver to make their eagles and maples and yet both countries produce only 55 million oz and thus must import silver.  Mexico is probably the choice of importing country. In 2010, the USA reported this import of Mexican silver:

Mexican silver exports have been in a slight decline these past two years.

With an average price of around 25.00 dollars in 2010, we can now assume this year, that Mexico probably exported to the USA no more than 48 million oz of which anywhere from 5 million to 10 million oz went to the making of the silver coins.  The remainder of the Mexico exports to the USA must satisfy demand for the metal for pharmaceuticals, xrays, film, solar panels. TV's, electric conductivity companies etc and finally to our comex dealers.  It does not seem possible that the comex can obtain the necessary silver that they need to satisfy the demands of investors who are wishing to hoard as they know this metal is rapidly disappearing from the bowels of the earth.

The missing piece in the equation is China.  Up until 2005 China was the dominant silver
refiner as they minted close to 80% of the world's silver.  Many mining operations would send their sludge to China for refining due to the toxicity in the process.  As China grew
and the nation needed the silver for its own use, exports of silver dropped into the 40% area:

(zero hedge   Oct 20 2010)

Chinese Silver Exports To Drop 40%

Tyler Durden's picture

After outperforming pretty much every asset class, most certainly stocks, and even gold, year to date, the "poor man's gold" may surge even more. The reason: China may cut silver exports by as much as 40%. As Bloomberg reports: "Shipments may decline from about 3,500 metric tons in 2009, said Feng
Juncong, chief analyst at the state-owned Antaike, without providing a
specific forecast. Customs data show exports plunged almost 60 percent
to 970 tons in the first eight months. Cancellation of an export rebate
in 2008 is also hurting shipments, she said." This is in line with recent expectations from the World Gold Council which haspreviously stated that China will likely become an increasingly greater buyer of gold both institutionally and at the retail level. And while we have discussed the impact that China's (temporary) ban on exports of rare earth minerals will have on prices (hint: not down), this will also end up driving silver prices higher. The catalyst, as usual, inflation: "There are Chinese investors now hoarding silver, along with other
resources, amid anticipation of higher inflation. 
China is
short of resources so these investors believe the metals will be more
valuable in the future." These investors are correct.
More from Bloomberg:
Reduced exports may bolster prices that are trading near a 30-year high on speculation that governments worldwide will take further steps to stimulate their economies, weakening currencies and increasing demand for assets that are a store of value. China, the third-largest producer after Peru and Mexico, revoked export rebates in August 2008 to curb use of natural resources.
“There is huge demand in China this year and that has affected exports, which were already hurt after the tax rebate was abolished,” said Ng Cheng Thye, head of bullion at Standard Bank Asia. “The demand is coming from all areas, including jewelry, investment and fabrication and this has resulted in a physical market shortage in the Far East.”
“China may sharply reduce its silver exports this year following the scrapping of the rebate and as domestic demand picked up amid expectations for higher inflation,” Feng said. This year’s 5,100-ton quota is unlikely to be fully used, she said.
China’s silver production, including mined, by-product output and recycled material, grew by an average 14.9 percent every year in the 20 years since 1990 to 10,348 tons in 2009, Feng said. Growth was mainly because of the fast-growing production of lead, zinc and copper, which generates silver as a by-product, Feng said.
The country’s silver output dropped 1.9 percent in the first eight months to 7,445 tons, she said. About 60 percent of China’s silver mined output is in the form of by-product of base metals, according to Antaike estimates.

The latest data we have from  China is a net import of silver of around 3,500 tonnes
or approximately 112 million oz. The data is from 2010.

BEIJING (Commodity Online): Silver is getting hot in China as imports of the white precious metal is soaring thanks to increasing demand for the commodity for industrial use and jewellery purposes. 

For the first time, China's net imports of silver hit a record high as it quadrupled in 2010 to 3,500 tonnes (112 Million ozs). Precious metals analysts view this as a shift in the Chinese demand for silver as traditionally China used to be a silver exporter. 

Lee Kui, a precious metals dealer in Beijing, said that a few years back, China used to export silver in big quantities. “For instance, in 2005, China made net exports of 3,000 tonnes of silver. In five years, the exporter of silver has become the importer of silver. This shows that Chinese demand for silver is soaring,” he said. 

China was a net exporter of silver for many years and the Chinese export used to be a major component of global silver supply. This changed in 2007 when China became a net importer of silver. The demand figures being released by the General Administration of Customs in China has been showing the massive turnaround in China from large silver exporter to large silver importer.

China has gross exports of 1,575 tons of silver in 2009, down 58 percent from a year earlier. China’s gross imports of silver increased 15 percent to 5,159 tons in 2010. 

A longer term perspective is as ever important as are the net figures. In 2005, China was a net exporter of nearly 3,000 tonnes (3 million kilogrammes) of silver. Last year, in 2010, China imported more than 3,500 tonnes of silver. Incredibly, Chinese net imports of silver surged four fold in just one year from 2009 to 2010.

Demand for silver in China has risen sharply in recent months and years. Growing middle classes and savers in China, India and other Asian countries have been turning to “poor man’s gold” and using silver as a store of value. Gold has risen above its historical nominal high in local currency terms internationally and silver is seen by many as a cheaper alternative. 

Buyers in China, Asia and internationally can buy some 50 ounces of silver for every one ounce of gold. The gold silver ratio today is 49.3 (gold at $1,342 per ounce divide by silver at $27.20 per ounce) meaning that 49.3 ounces of silver can be bought with every one ounce of gold. 

Gold is increasingly unaffordable to the “man in the street” in China and wider Asia and this is leading to increased purchases of silver as a store of value, rather than gold. With the price of gold set to remain high in the coming years, this will continue. 

Chinese and most Asians have experienced the decimation of their life savings through currency debasement and hyperinflation and unlike westerners understand the importance of owning gold and silver. 

Besides huge demand for silver as a savings vehicle and a store of value in China, there is also very significant industrial demand in China and internationally. 

There remain a huge range of industrial applications for silver. While demand from the photography sector has declined, demand from the medical, solar energy, water purification and many other sectors continue to rise significantly. 

Today industrial uses account for 44% of worldwide silver consumption and in conjunction with investment and store of value demand, industrial demand continues to grow. 

According to a new research report from China Research Intelligence (CRI), an important feature of China's silver market is that the domestic price is higher than international market price. 

“Domestic price of silver in China is not completely synchronized with the international price and it lags behind with too large fluctuation, resulting in increasing risk of downstream silver consuming enterprises,” said the report. 

The CRI report said that China urgently needs to improve the formation mechanism of domestic silver price and seek appropriate trade modes to maintain values and avoid risks. It will be the general trend to introduce silver futures.


With imports of gold tripling into China this year, we can also assume that citizens are importing
greater supplies of silver than before. My guess is that the net imports of silver into China would be north of 200 million oz.this year.

We thus have the following:

India imports  160 million oz of silver to satisfy their huge demand for precious metals.
China imports; 200 million oz
USA and Canada Mint usage:  65 million oz.

total  425 million oz or  60% of mining production.

It seems that the comex will have a tough time finding the necessary physical silver as demand
for this important metal is certainly having its effect.

Clearly, the physical supply of global Silver is being crimped.  Why hasn't the price of Silver reflected this growing physical shortage of this Precious Metal?

Blatant Suppression Of Silver Prices
By Patrick A. Heller – Liberty Coin Service
Commentary on Precious Metals Prepared for

One tactic used by the US government, its trading partners, and allies in its effort to hold down the price of gold is to also manipulate the price of silver. Most of the time, gold and silver prices move in the same direction. Therefore, it the price of silver can be suppressed, that will influence investors and traders into expecting lower gold prices.

On January 17, the spot price of silver closed on the COMEX at $30.11. Yesterday, it closed at $33.70, an increase of 11.9%! Most people would take that as a sign of a strong silver market. However, the silver market is really much stronger than that relative price change.

In the COMEX weekly Commitment of Traders Report as of January 17 (which was reported on January 20), Commercial traders had a net short position on the COMEX of 20,382 contracts. At 5,000 ounces per contract, that means that Commercial traders, which are primarily the bullion banks who are trading partners of the US government, had a short position of 101,910,000 ounces on January 17.

In the Commitment of Traders Report as of February 7, which was released on February 10, the Commercial traders net short position had increased by 14,268 contracts from January 17. As of February 7, the Commercial traders were net short 34,650 contracts, or 173,250,000 ounces!

In other words, the Commercial traders shorted the market by 71,340,000 ounces of silver on the COMEX from January 17 to February 7, increasing their net short position by 70%! The 71 million ounce increase in the short silver position is equal to about 10% of annual worldwide new silver mining supplies!

Normally, the selling of 71 million ounces of silver in a period of three weeks would cause the price of silver to plummet! How much higher would the price of silver have jumped January 17 if this increase of “paper silver” supply had never occurred?

But this short selling wasn’t the only recent blatant tactic to suppress silver prices. At the beginning of February, 1- and 2-month silver lease rates turned negative. Over this past weekend, 3-month silver lease rates turned negative. So, not only do borrowers of silver not have to pay any interest to do so, they will actually be paid a fee by the lender. Obviously, lenders are not making a profit when lease rates are negative. Negative lease rates send a signal to the market that there is so much of the physical commodity available that it should be worth less than its current price level. Therefore, the price of silver should have been declining in the past two weeks rather than treading water.

Last Friday, the COMEX dropped margin requirements on all the commodities it trades. The margin requirements for gold and silver futures contracts were decreased by 11% to 13%. Usually, when it is easier for investors to borrow money to purchase an investment, that tends to lead to greater demand followed by higher prices. Several people have contacted me to ask about the implications of lower margin requirements for leveraged gold and silver COMEX trading.

I have three thoughts about the decrease in the COMEX gold and silver margin requirements. First, the decrease affected all commodities traded on the COMEX. In the circumstances, it would have looked strange for all margin requirements to be decreased except for gold and silver. It could have resulted in more investors realizing that gold and silver prices were being suppressed.

Second, even though gold and silver margin requirements were reduced last week, they are still far higher than they were a year ago. In effect, the COMEX should have reduced gold and silver margin requirements before last week, and reduced them by an even a greater percentage than happened.

Third, one way that market manipulators can make a profit is by temporarily suppressing prices even though the long-term trend is for higher prices. The Commercial traders can sell a lot of paper contracts to drive down the price, shaking out weak hands investors, then cover those new short positions after prices have fallen. A decline in margin requirements could entice some weak hands investors to enter the gold and silver market just before a major price drop, thereby increasing profits earned by the Commercial traders.

Even though the price of silver has increased from four weeks ago, it is entirely possible that there will be one significant price drop before silver soars. The COMEX March 2012 silver options will expire February 23. The First Day of Notice for Delivery of March 2012 Futures contracts is February 29. Therefore, the US government has a huge incentive for silver prices to drop from current levels before those two days.

Once we get past February 29, I expect to see some real fireworks as the price of silver shoots up. Look for it to break free of the effects of increased short selling by Commercial traders and negative lease rates that have slowed down the rise in silver prices over the past four weeks.

So, in order for the CRIMEX to meet the demand for physical Silver that in unavailable, Commercial traders sell paper contracts for physical Silver delivery to "potential" buyers to meet that demand.  This "naked short selling" of Silver that does not exist by the Commercial traders is perpetrated to give the "illusion" that there is sufficient supply in the physical market to meet present demand.

How can the Commercial traders sell Silver they don't own, and not get caught with their pants down when the time arrives to meet delivery demand of the Silver they have sold to "potential" buyers.  The simple answer is they only expect 10% or less of these "potential" buyers of physical Silver to actually demand physical delivery of the Silver they have "bought".

In essence, if the "demand" for physical Silver at the CRIMEX isn't "completely real", the "supply" of physical Silver doesn't have to be "completely real" either.  That's a neat little game, eh?  But what if more than 10% of "potential" buyers of CRIMEX Silver demand delivery of the Silver they have a contract for?

The Commercial traders would be up the creek without a paddle!

How Could Silver Short Sellers Cover Their Positions?
Eric Sprott: Silver Will Become a Currency Again
From SilverDoctors

Wednesday, February 22, 2012

Telling A Lie Big Enough, Loud Enough And Long Enough...

...and this is why the first three letters of the word "confidence" spell CON.  Its all a CON by the government to convince the unsuspecting American public that the economy is A-OK!  After all, a strong stock market is the sign of a strong economy!  Right?


Dow 13,000? Try That Priced In Gold
by Plan B Economics 

Today the DJIA index (DIA) touched 13,000 for the first time since May 2008. Mainstream media has printed articles suggesting we will again witness a flood of retail investors throwing money at the markets now that we've broken a psychological barrier.

At the same time, we have analysts arguing that Dow 13,000 is a meaningless number. I tend to agree.

Quite simply, some of the biggest stock market booms in history were coupled with the some of the biggest currency devaluations in history. The Weimar Republic and Zimbabwe are two examples that come to mind.

I'm not saying that the US is anywhere close to the Weimar Republic or other hyperinflationary environments (at least, not yet), but the same principles apply. With trillions of dollars injected by central banks into the global financial markets over the past few years, I can't help but think these stock market gains are somewhat diluted. Housing deflation aside, is $1 today what it was at the bottom of the market in March 2009?

With that said, measuring the true value of $1 is quite difficult. After all, CPI is manipulated and various other measures are highly personalized.

One of my preferred proxies for monetary expansion is gold (GLD). When measured in terms of gold, the DJIA has actually fallen by almost 11% since the March 2009 bottom. Compare this to the DJIA in nominal terms, which has risen over 70% during the same time period.

In my opinion, we should be concerned about this massive discrepancy, and celebrating Dow 13,000 may be premature.


"The only thing we have to fear is fear itself."
 -Franklin D. Roosevelt, First inaugural address, 1932

...but what Americans fear most...IS THE TRUTH!

The Fear of Gold
By Jeff Berwick, The Dollar Vigilante

I was on a panel at the recent California Investment Conference in Palm Springs and the question was asked, "What percentage of your portfolio should be in gold bullion?"

The first panelist answered 20%. The second panelist said, up to 30%. Then it came to me.

"I have no problem with someone having 100% of their portfolio in gold," I stated bluntly. Many in the crowd laughed. Their laughter confused me. What's so funny about that, I thought?

I went on, "I think it's weird that people find my answer weird."


After all, we are talking about time tested and true money. The only money that has lasted for thousands of years and is still fully accepted worldwide as a store of wealth. Even Warren Buffet had to recently admit that “Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”

And that from a man who hates gold the way Whitney Houston fans hate Bobby Brown.

So, by stating that I have no problem with someone having 100% of their portfolio in gold I am making an ultra conservative statement. I am stating that I'd have no problem with someone having their entire portfolio in "cash". In real money.

What would you rather hold "for eternity"? US dollars? A paper debt obligation of a bankrupt nation state?

The fact that so many found that to be a shocking statement says a lot about where we are in this current process of the collapse of the fiat currency system.


There is such a "fear of gold" amongst most people that it must be due to statist indoctrination and propaganda. It makes no rational sense to have such a fear of such a time tested and true store of wealth.

The same people who fear gold seem to have no problem holding a significant amount of their assets in euros in a European bank as Europe burns around them, both figuratively and literally. The euro might not exist 12 months from now but no one seems too concerned. They act like its been around forever and always will be, but it only was dreamt up by globalists in 1999.


Near the end of 2007 a good friend of mine who had been wanting to sell her house called me. I had been telling her for a few months to sell her house and buy gold because a big housing crash was coming.

She said she had received a good offer for her house and checked with me to make sure I was certain about her selling, buying gold with the proceeds, and renting for a few years. I told her, emphatically, yes.

So she sold her house. At the time gold was around $750 per ounce. We fell out of touch for a few years and she contacted me last year around when gold was near $2,000 per ounce. I smiled when she called, waiting for her to tell me about the fortune she made.

"So?" I asked, waiting for the exhaltation.

"What?" she also asked, confused.

"How'd that trade work out for you?" I asked.

"Oh. Well I sold the house. And I put the funds into my brokerage account with my (government registered) financial advisor," she responded.

My heart sank. I knew what she was going to say.

He talked her out of it. He said putting all her assets into gold was far too risky. Where in the government training manuals does it tell you to even own any gold!

She got worried too and less than a year after selling, under pressure from her old Chinese parents, bought another house. It was a bit cheaper but after transaction and moving costs it was a loss.


Of course, now, with gold over $1,700, it is nearly impossible to get anyone from the general public to buy gold. It's gone too high, they cry! CNBC says it was a bubble, they repeat like trained seals.

It's gone from near $300 to nearly $2,000 in the last decade. Surely that is a bubble and if it hasn't already popped it soon will, right?

No. That's not right. This is the problem with watching the value of anything in terms of constantly depreciating US Federal Reserve Notes. In the following chart, when looking at the price of gold in nominal dollar terms it looks like an insane rocket ride of epic proportions. But, when adjusted by the US Government's own, heavily massaged inflation statistic (the Consumer Price Index, or CPI), the price of gold has just finally reached nearly the same level it was at in 1980 and looks far less spectacular.


Getting back to the initial question posed on the panel as to what percentage we recommend people hold gold bullion as a percentage of their portfolio. While I stated I'd have no problem with 100%, we actually recommend to TDV subscribers holding 30% of their portfolio in bullion - both gold and silver.

We also recommend, at this time holding 20% of your portfolio in gold mining juniors and 15% in gold mining major stocks amongst other things. That's because we are expecting all the monetary printing going on with abandon in the western world to foment a true bubble, not only in the price of gold but even moreso in the price of the mining shares, especially the juniors.

We are expecting a mania for the ages in these stocks. And, how will we know when to sell? When I am asked what percentage of their portfolio should be held in gold bullion and I say 100% and no one laughs.

This next piece is exceptional...and this is why now that this Greece BS is "resolved", its not the Euro that's in trouble in so much as it is the pathetic US Dollar that is doomed...

...of course the mainstream media here in the USA will most likely focus on the debt issues facing Portugal and Spain next...and continue to hide the truth from the "unsuspecting Americans... It's the Fall Of Rome all over again. The Roman citizens were the last to know their currency was worthless, and they were left there asking, "How could this happen?" The exact same thing is happening right now to the USA and the Dollar...but nobody wants to belive it OR admit it. Its called DENIAL.

The noise the media spews about a recovery is sickening...rigged data numbers from "the government"...all to instill "confidence" in the people that the government can, and is, fixing things.

Yeah, ...and monkeys don't eat bananas.

Gold: 1980 vs Today
From , via Zero Hedge

When gold was undergoing its latest (and certainly not greatest) near-parabolic move last year, there were those pundits consistently calling for comparisons to 1980, and the subsequent gold crash. Yet even a simplistic analysis indicates that while in the 1980s gold was a hedge to runaway inflation, in the current deflationary regime, it is a hedge to central planner stupidity that will result as a response to runaway deflation. In other words, it is a hedge to what happens when the trillions in central bank reserves (at last check approaching 30% of world GDP). There is much more, and we have explained the nuances extensively previously, but for those who are only now contemplating the topic of gold for the first time, the following brief summary from captures the salient points. Far more importantly, it also focuses on a topic that so far has not seen much media focus: the quiet and pervasive expansion in bilateral currency agreements which are nothing short of a precursor to dropping the dollar entirely once enough backup linkages are in place: a situation which will likely crescendo soon courtesy of upcoming developments in Iran, discussed here previously.

As seen on Zero Hedge

John Williams of gave an interview a few weeks ago where he discussed the pending collapse of the U.S. Dollar as the world's reserve currency, as well as the role gold will play going forward.


Gold closed today at a new high for 2012 today...


On the heels of a Greek bailout, which has gold trading more than $20 higher and silver back above $34, today King World News interviewed Rick Rule, CEO of Sprott USA.  Rick spoke with KWN about what has just taken place with Greece and what it means for gold.  Here is what Rule had to say: “I don’t think Greece was bailed out, I think the banks that were stupid enough to lend Greece money were just bailed out.  They have talked about an injection of fresh cash to maintain Greek living standards.  Simultaneously, they have announced fairly aggressive cuts.”

Rick Rule continues:

“They are aiming at slashing the debt to 120% of GDP by 2020.  This means if you believe that all of the assumptions they made are correct, then Greek debt will go from unserviceable to barely serviceable by 2020.  It’s important to remember that the people who are making these assumptions are the same people who made the decision to lend money to Greece in the first place.  This lending has Greece 160% in debt vs their GDP.

I suspect that ultimately we are going to see a Greek default.  Right now we are buying time so that more of the private sector and private banks can unload their Greek paper on the ECB.  This will socialize the losses which have occurred as a result of stupidity on the part of the banks.  As I said earlier, this is a bank bailout, not a bailout of Greece....

“Further, the European community is talking about increasing its ‘firewall.’  This is the amount of euros it holds in reserves for difficult times, up to 750 billion euros.  Given that none of the European countries have 750 billion euros floating around that they can move from an operating account into a rainy day account, one would have to assume this fund will be funded the same way it was in the US.

What this really means is this will be a printing facility.  So 750 billion euros will be counterfeited in this scheme.  We are just picking on Greece because they are in the headlines, but certainly there are difficulties in the rest of the economy.  Italy, Spain, Portugal, Ireland and France all have their own problems.

Remember, Eric, that not too long ago Germany had a failed bond auction.  So I don’t think we are out of the woods in Europe.  In this environment the US dollar may remain strong because people are still focused on Europe.  The US problems, while severe, appear to be less time critical than the European problems.  Investors are looking at Europe, but there is a great deal to be concerned about on the US side as well.”

When asked how all of this will impact gold, Rule replied, “I think gold will continue to proceed higher.  That doesn’t mean gold can’t have corrections, but much of that volatility is background noise.  Gold competes with fiat currencies as a medium of exchange and gold competes with sovereign debt claims as a medium of storing wealth.

Given the fact that all around the world the sovereigns are busy inflating, that is counterfeiting, it would seem to me that gold faces no competition.  Over time, the depreciation of the competitor has to favor gold in the two to three year time frame.  You know, some value is afforded by scarcity and certainly with regards to fiat currencies there is no scarcity.”

There's no inflation according to Federal Reserve Chairman Bernanke.  The US Dollar is "strong" according Treasury Secretary Geithner.  The economy is in a recovery according to President Obama.

Gas prices are highest ever for this time of year
By Chris Kahn, AP Energy Writer 

NEW YORK (AP) -- Gasoline prices have never been higher this time of the year.

At $3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April.

"You're going to see a lot more staycations this year," says Michael Lynch, president of Strategic Energy & Economic Research. "When the price gets anywhere near $4, you really see people react."

Already, W. Howard Coudle, a retired machinist from Crestwood, Mo., has seen his monthly gasoline bill rise to $80 from about $60 in December. The closest service station is selling regular for $3.39 per gallon, the highest he's ever seen.

"I guess we're going to have to drive less, consolidate all our errands into one trip," Coudle says. "It's just oppressive."

The surge in gas prices follows an increase in the price of oil.


Wow, gas prices have surged because of a rise in the price of Oil?  I wonder if Gold prices have surged because of a rise in the price of Oil?

Got Gold you can hold?

Got Silver you can squeeze?

It's not too late to accumulate!