Oldtent Archives 2007 - 2008

I have a line on a failrly sizeable collection of Double Eagles, never turned in during the FDR mandate, held in the family all these years,not numismatic, graded quality, beat up and carried around in overhauls most likely for years in South Georgia. I do not want to take advantage of the source as it is an honest man-a rare breed in these times and he trusts me. So what should a fair price be? Sure can’t tell from official pricing. Will Eagles go up or down in the near term. This is a delicate situaion and I would prefer to pay a little extra that to get these cheap or comex, some were selling for around 1258 in shops recently where I live. I want them, but want to be fair to the seller and to me. Going to discuss with a derler tomorrow, but i trust the tenters more. If I can purchase them all, I will sell some as the purchase price will need to be borrowed and I am adverse to debt for more than several minutes. Break out in hives and start break dancing until source of the affliction is adequately dealt with………

………………They are a reputable Country…..not like the Crooks at the BLS who run fantasy statistics !

……………….The Chinese are more Honest than the Amecicans !

……………….want proof ?

………………They ADMIT they are Communists !

……………….9.9% it is !…………..

……(CLICK ON IMAGE)

To all; I sat around this weekend trying to put current events into perspective. I began to think in terms of scope and size of what has already occurred. The world produces roughly 2400 tonnes of Gold per year, back of the envelope math at today’s paper price values the total production at something like $60-70 Billion. Last week alone the Treasury borrowed about $250 Billion in short term notes. They are scheduled for another $97 Billion today and tomorrow. The Comex has roughly 140 million ounces of Silver worth roughly $1.5 Billion while Gold inventory [I think] is about 8 million ounces worth close to $7 Billion. So far the U.S. has pumped about $1.5 TRILLION into the system while Europe and Asia have added at least this much. With the inventories so small in these “metal” paper markets in relation to the paper markets that the governments feed from, it is no wonder that contract prices can be made to bark, sit, and rollover at will. The physical market however is drying up rapidly and could be considered already a “black market” since real prices no longer resemble the paper markets that governments want us to believe. Official inventories add up to nothing in Dollar terms and street inventories are virtually non existent. Human nature is a funny thing, when something becomes unavailable, everyone wants some. We are at this point right now.

Now, one either believes that the metals are either real money or not. I believe they are real money while the paper currencies that were once derivatives of metal are now simply pieces of paper with numbers on them. If you believe that Gold and Silver are real money, it would make sense to sit back and try to grasp what will happen to metals prices “if” the worldwide banking system loses it’s wheels.

Governments have created literally $Trillions over just the last year to cope with a global problem that soars into the hundreds of Trillions. If you add up all the Gold ever mined since the beginning of time you get a number north of $1Trillion and less than 2. Much of this Gold is government owned, much is vaulted and will never see the light of day at any paper price, and much more has been taken off the market and will not come out to play unless a lot more paper is offered. The point is, metal, THE REAL STUFF is simply gone from the market. It is in very strong hands now. The scuttlebutt and evidence worldwide is about Gold and Silver being in shortage positions. Again, human nature is a funny animal and when something goes into shortage, humans flock like grackles to a corn field “to get’em some”. By the way, I wrote “if” as a joke since it is now a mathematical certainty that either the banks collapse or hyperinflation takes hold.

Now the perspective part. The

Jurg Kiener, CEO of Swiss Asia Capital. He points out the stark contrast of the two markets, paper gold versus physical gold. A titanic battle that began years ago has reached fever pitch, sure to result in a default in the illegitimate corrupted futures contract markets.

Kiener expects soon the US ‘gambling price’ gold market in COMEX and LME to eventually default. By that he means a return suddenly to physical price determination will come for gold. He concluded that when such an inevitable event occurs, THE GOLD PRICE WILL DOUBLE VERY QUICKLY, LIKE IN DAYS. Watch the brief clip (CLICK HERE). In late September, on back to back days, the departure of silver from physical stocks in the COMEX vaults was huge, as in 600k oz silver and 250k silver.

At one point only 5000 oz silver remained in inventory. The decline in the silver price coincides with vanishing inventory! A default event is close. Criminal fraud prosecutions could follow.

My full expectation is for criminal prosecutions and very public arrests to come to COMEX officials, who have sponsored fraud in several contracts like gold and USTBonds, and engaged in massive collusion with the Commodities Futures Trading Commission, surely with the Dept of Treasury also. The exposure will add fuel to the gold rush.

Reports have come from a London source that gold futures contracts are being settled in cash only at the COMEX, rather than with physical gold metal. That would leave potential buyers without the metal demanded for delivery under contract.

IS THAT NOT A DEFAULT? A former veteran gold trader told me recently, “It is my understanding that COMEX is very low on inventory. Most of the gold and silver has been moved out months ago.” A subscriber refutes the story with actual experience with a friend. He said, “I talked with my commodities broker who is affiliated with RJ O’Brien, the largest independent commodities broker and third largest commodity broker in North America. Ryan called the RJO headquarters in Chicago and talked with their head delivery guy who has been doing that job for 18 years. The delivery guy said there has been no change in COMEX delivery process.

People who are legitimately in the trade (e.g. jewelers, bullion dealers, etc.) can and always have been able to take physical delivery. Likewise there has been no change in the COMEX policy of rolling over contracts for people that have no clear working business need for gold.” However, one should notice that no reference is made for people without that so-called legitimate trade who wish to take delivery. They are probably denied, and forced to settle in cash. You and I cannot take delivery, and therein lies the fraud, which might now be more publicized and aggravated.

It might be slowing by 9.9% though.  Face means a lot to the Chinese.  They would never admit such a contraction.  But shipping rates have fallen 88% since June - that doesn’t indicate 10% growth anywhere (well, maybe tiny landlocked Liechtenstein might be doing OK).  Then there are all the anecdotes of factory closures, staff not being paid, slumping car sales (down 6.2% from last August) etc.

http://news.yahoo.com/s/ap/20081020/ap_on_re_as/as_china_economy

Bill,
I last reported on the COMEX DEC Gold CALL options on September 21. The options structure on the COMEX is still very bullish. Since 9/21 the COMEX DEC Gold CALL options open interest has only decreased 2,745 contracts to 157,874 contracts. Gold was trading at $860/oz at the time and rising so this is a stellar performance to only lose 2,745 contracts. The DEC Gold PUT options open interest has only increased 1,089 contracts to 93,967 contracts. The Call/Put ratio is 1.68 to 1 which is little changed. As I have explained before buying out of the money call options and then buying the futures is a way in which big money can get a large gold exposure as the futures buying drives the gold price higher taking the options into the money which can then be exercised. The way that the OI has remained resolute in the face of extreme price volatility induced by the gold cartel is very telling. The December contract is probably going to be the point of explosion as I have long since predicted. The 2 ¾ year declining trend of the Goldman Sachs TOCOM gold net short position indicated they would be net long gold on TOCOM before November 25. The COMEX DEC Gold option expiry is November 20. Coincidence? I doubt it.
Cheers
Adrian

..then increasing weakness across the board…..including commodities….so I guess you are saying asset Deflation is still in play..

….could be so……OR….maybe commodities have corrected and are going back up….Notice China still growing at 9.9%………….and they think thats too slow…so they are loosening money again………..(as per CNBC )

….I guess we watch Copper

…Now………………. Whatever happens in Commodities…may not also happen in PMs…….especially with the below noted Physical Shortages getting more and more accute…

…………Gold and silver could be ready to be the Go To “Currencies”…as the Fiats tumble against eachother……….

……Just waiting /hoping for the PHYS markets to start dictating Price instad of the Paper markets..like they should !

Just got this flash late morning from Hugo Salinas Price, whom many of you know…

Hi Bill!
Our central bank has informed us as of this morning, that they will only be able to supply us with 60,000 “Libertad” ounces from here to December 2008.

Banco Azteca has in stock only 15,000 ounces at this time.

Banco Azteca has been selling 60,000 ounces a month in August and in September.

Question: How is it possible that a country which is either No. 1, or No. 2 (Perú sometimes exceeding Mexican production) cannot supply silver coin?

Question: Is there some sort of agreement at high level, to restrict the amount of silver coin that the population can obtain?

Question: Does this measure go beyond the scarcity of silver at the present “paper price” of silver, to a deliberate restriction of silver coins to be placed in the hands of the public?

This restriction on supply on the part of the Banco de México, which mints the “Libertad” ounce, is disturbing to say the least.

Will keep you posted.
Hugo

This fits right in with my printed suspicions for some time now. It surely appears, starting with the US Mint and its own reduction of coin sales, that numerous governments close to the US are restricting gold/silver coin sales in order to slow down demand and keep precious metals i.e. REAL currency out of the hands of the people … in order to keep the prices of both precious metals as subdued as possible. Yes, it is a quiet CONSPIRACY to detour as many investors from running away from fiat currencies. This conspiracy has been extended to various bullion banks who claim they don’t have gold for sale. There is just too much smoke out there not be any fire.

From Mexico to Australia…

Dear Le Patron,
The coin and bullion shop in Canberra tells me that Perth Mint has ceased sales until some time in November in order to clear the current order backlog.

On Friday I was in Sydney to pick up an order and there was a queue of maybe a half-dozen forming in the corridor outside Ausbullion. On his way out one customer said they were no more small gold bars available. Many customers were filling in identification paperwork as it was their first bullion purchase there. Fortunately we bought in July.
Regards,
Alex

Bill,
Just got off the phone from Perth Mint and it seems they are suspending production of silver coins with immediate effect. The shortages seen in US and Canada have finally hit Australia.

It is my understanding that only a few silver and gold bars remain in stock. A small delivery of gold nugget coins is due next week. Suggest anyone thinking of ordering should get in quickly.

For the record (contrary to Jason Hommels unsubstantiated views) I have found the Perth Mint to be helpful, competitively priced and true to their delivery date commitments. I hope this is a temporary setback.
Regards
Bullionmark
www.bullionmark.com/

MIDAS note: Seems to me this is what Jason said was coming all along.

These reports have been coming in for weeks and are spreading from one country to another. Those that haven’t been experiencing shortages, all of a sudden are (see South Africa below).

Dear Bill,
Our company has several orders of silver bars pending with Ohio Precious Metals in Jackson, Ohio, which they have been delivering so far pretty much on schedule. On Friday, my head trader Allan Beegle was talking with their guy in charge of producing 100 Oz bars. He told Allan that Comex 1000 ounces bars are not useable by them because OPM makes silver bars to .9995 purity standard. The Comex bars are only .999 fine, which means that they would have to refine any Comex 1000 oz bars they received, which isn’t practical for them right now.

By the way, we just sold a small quantity of 1 Oz Canada Gold Maple Leafs to another dealer for about $100 above what the so-called Comex spot price is showing, and the dealer was thrilled we could supply him.

Pat Heller
Liberty Coin Service
Lansing, Michigan

A flurry on South Africa and gold…

Is South African Krugerrand supply waning?

Dear Bill
greetings from Botswana again

Coin buyers in and around South Africa have always been in a privileged position.

Not only were they close to source i.e. one of the major gold producing country’s of the world (although South African production has dropped by a whopping 56.6% since peak annual production in 1970 to 2007!!). see www.goldsheetlinks.com/production.htm

But we also only have a handful of SAANDs (south African Assoc of Numismatic Dealers) to go through which makes life simpler.

Due to these facts (plentiful supply, few dealers) it has meant that in the past we have not had to shop around much for availability, only as regards best pricing.

However this is now changing as my JHB dealer is now reporting supply shortages despite Rand Refinery (RR) putting in all the hours that God sends. www.guardian.co.uk/business/2008/oct/02/banking.economics

I asked three weeks ago if there were any supply problems to which the answer was “No” apart from a spike one off demand of 5000 krugerrands from a swiss buyer.

When asked today however if there are any supply problems yet, my dealer replied:

“Yes, RR is indeed experiencing supply problems. Obviously, local and global demand is strong and at the same time [south african] Gold Mines are not supplying enough. Remember, their power usage was cut 10% by Escom in the beginning of the year and in between there were shutdowns because of fatalities.”

(incidently: www.miningmx.com/radio/817004.htm - Accidents cost Gold Fields 300 kg in lost production)

I then sent the following questions to which he appended answers:

1. Does the RR not have a gold stockpile they draw from, and if they do have a stockpile, has it now been depleted by current heightened coin/gold product demand?

It has been depleted. Lead time for 50+ coins is 3 weeks. [used to be 3 days]

2. Does RR produce its own blanks from gold bought from the mines. If not where does RR get its blanks from to mint its gold coinage?

RR produces the blanks, it gets sent to the SA mint to strike and then gets returned to RR for distribution.

3. Is the gold coin supply shortage due to lack of supply of blanks or raw gold to make the blanks?

High demand and lack of raw gold

4. Does RR have set allocations of Krugs to produce each year or does it just try and supply the current demand?

I believe they forecast production according to history. Obviously history doesn’t count when demand shoots through the roof and raw gold supply falls through the floor. We have experienced an increase in volumes, but not the type up north [hemisphere] where people are queuing out of the front door. After all, our banks are “safe”…tsk tsk…right?

So there you have it Bill. Not only is mine production down since 1970 by over half but the mines currently can’t supply the refinery fast enough with raw gold. As we are talking about the refinery here, it is not then just a case of dore bars waiting to be cast into the relevent denominations (cast bars and coins) as some people have hinted is the case with silver. There is simply not enough raw supply coming from the South African mines to keep pace with demand!!!!

In terms of putting this in context to the classic stages of the gold bull market, I think we can say the following:

1st Stage: Initial Contrarian investor demand- gradually rising demand - low volatility

2nd Stage: Global Investment Demand - gold price making new highs in major currencies, increased volatility

2nd/3rd stage cusp - supply shortages - tipping point?

3rd stage: Popular Speculative Mania - no physical supply - currency crisis? - stampede to PM stocks - massive volatility

The ongoing manipulation/suppression of the gold price is possibly masking stage characteristics. Thus we are already seeing supply shortages in phase two due to the COMEX/physical market discconnect. With the current fragile, unstable and volatile state of affairs we are witnessing in the global financial markets it will only take just one of a multitude of now possible events to provide our required tipping point. Then stage three here we come. Take your pick:

1. more major US bank or company liquidations/bailouts

2. further derivatives breakdowns

3. bank runs

4. COMEX/LBMA defaults

5. collapse of the bond markets

6. failed liquidity loosening with 700bn

7. another request for Bailout funds by the FED/Treasury

8. Currency crisis

9. Gold breaching $1500

10. bankruptcy of the FED/Treasury

11. inflation spikes up

12. US$ losing its world reserve status

13. Introduction of Bretton Woods 2 or some form of gold backed currency

14. Continued divergence on Libor/TED spreads reaching critical point

15. ‘gulf of tonkin’ type event in the middle east

16. real or false flag terrorist event on US soil

Whats worrying is that most of the above are inter-related with one capable of triggering many of the others.

What’s the common denominator?? LACK OF CONFIDENCE IN THE DOLLAR!

rgrds
LT
Botswana

Dear Bill,

  TQ - thanks, I hope it doesn’t come to that

  Soee - probably right, gonna zig and zag and take awhile to rebuild this thing.

  *Unless we start to see some mega move in the metals. Hard for me to envision that scenario at the moment.

Colorado GOLD

I understand what you’re saying.  I would offer this explanation:

The HUI was actually doing pretty well compared to the SM from last fall until about June-July.  It was almost negatively correlated.  Why is that?  Because commodities were seen as a safe “shelter” compared to some of the non-commodity sectors like financials or retail - plus at the time it was a US financial/economic problem and it wasn’t suppose to affect the global growth story.  However, the bear eventually came for the commodity bull (i.e. the strongest sectors fall last — read oil or basic materials) as they typically do towards the end of a bear market.  Gold and the stocks tend to lead most commodities and this time was no exception.  PMs peaked in March as they anticipated the bear market capitulation and global growth slowdown (disinflation and reduction of risk taking/deleveraging).  This is why I was ringing the alarm bells back in February about the big picture. 

I don’t want to give anyone the wrong impression: the overall SM bear and commodity sector pullback is still in full force for the foreseeable future.  I’m trading this bounce while it lasts…hopefully it won’t disappoint.

..look at the long term chart !

stockcharts.com/h-sc/ui?s=:&p=D&id=p88702858943

……..as I said in a post to Equiz.you were right you guys who said HUI Collapse in a Broad market Collapse………but as I noted recently also…the HUI started its Crash in Mid July !…went from 480 to 250 in 2 Months… to Mid Sept…almost 50% in 2 months…While the DOW just stayed even to up !!

………The Dow didnt really Collapse till OCT 1…

….HUI had a 2 phase collapse…after 520 to 250 a bounce to 320 then kaboom to 190…
…..but even that second leg down started before the Dow Crashed !

….Equiz had a good observation/ speculation…

…Maybe the first of the Redemptions and margin calls were taken in winners…ie Gold Stocks….

…Could be…but whatever…..the truth is the Obscure little HUI LEAD the DOW et all Down !

…I really beleive HUI was finally going up without the Dow…..it had broken away earlier before all this…..and now its going up in lock step………maybe when the dow double bottoms.HUI pauses and the resumes up ahead of the Dow …..and leads it up..by a couple months !

…..You sure couldnt convince me that HUI is not one smart little fella in hindsight !