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Friday, September 19, 2008

Silver Shortages grow!

I would love to go into the precious metals business and start dealing in bullion. This would be an excellent business because as we enter this bull market, more and more people will want to buy metal, and business will be booming. Additionally, I sincerely believe in the moral benefit to owning gold and silver coins, so I would feel very good about getting gold into the hands of people, and out of the clutches of the evil central bankers who stole it in the first place. I believe I would be providing a genuine service to humanity by helping people protect their wealth, and I would be fighting the good fight against central banking, which is a cause of much misery in the world.

Unfortunately, I know default is coming. I know that eventually, the time would come when I would take larger and larger orders, and then, I would try to buy gold and silver in New York, and I would get nothing after having placed the order. I believe the coin dealers in this country are real heroes to continue their business in the face of such danger. Essentially, I know that the situation is like a con game. Confidence keeps the game going, and I do not have confidence in the New York price, unlike our heroic coin dealers. I've talked to coin dealers about this, and they shrug it off, saying that's just the normal risk of doing business, just as there are risks in any business. I think that's an amazingly heroic attitude to have.

On April 4, 2008, I warned against holding paper futures contracts, because you need to be able to stay fully invested and holding on to your physical metal that you might not be able to replace during a shortage, caused by 50% price dips.
I Don't Trade Futures April 4, 2008

Key Excerpt:

Silver is volatile, more than gold. In Gold's last bull market, gold dropped nearly 50% in 1975, from about $250 to $125, and didn't recover for 4 years.

What if silver did that? Or worse? Could you sustain that kind of loss in futures? Could you ride it out? Not in futures that only go out 2 years.

How can you protect yourself from such an event in silver, in this bull market? Would you have to use less leverage? Or buy longer dated options that don't exist? Should you put down 75% of the money for your silver position, but not hold the silver and still risk a delivery default?

Futures and Silver are fundamentally different things.

Futures expire. Silver does not.

--end excerpts--

I don't share this to "toot my horn", but rather, to refute those who say that nobody predicted this, and to refute those who say that I didn't predict this. I predicted this. Exacly what we see today. Anyone could have predicted this. In fact, I predicted silver shortages in my advertising for over the past year. I've predicted shortages for so long, that people began to say I was crying wolf. But the wolf is here now. The coming shortages in silver was self evident to anyone who took the time to study the fundamentals of the small size and tightness in the silver market, and who can understand relative size of markets, and who can understand the basic math that shows that paper usury systems must fail due to the inescapable conclusion that you cannot compound your way to owning every atom in the universe.

They cannot prevent $14,000 billion in the banking system from entering a $1 billion silver market, by manipulating the price of silver low, and not have shortages! It's self evident!

I thank God for what he taught me about usury, that he taught me to not take his word on the matter, but to really search it out, and meditate on it, and think deeply about the concept and its real world and theological implications. Usury leads to slavery. We are called to love our enemies, not enslave them. We are called to freedom, as where the Spirit of the Lord is, there is Liberty.

Yes, Biblically speaking, we have the liberty to lend at usury, and even enslave others! But we are called not to do those things, as I see it.

One man tells me that interest is merely a discount that the market places on future goods. Wrong. Interest is not a discount. It's an extra fee! Usury is a bribe to get you to accept future goods rather than accept payment today. The Bible also calls us to not withhold from the worker his daily wage, nor to defraud the worker by withholding wages. Social security and 401k plans that get raided as companies go bankrupt are not the Biblical way. As I see it, you have the right to not accept the bribe of usury, or interest, for delayed payment, you have the right to not lend and not borrow, and that is the better, Biblical way. So, in a sense, I'm not advocating zero usury, I'm saying I refuse to be bribed even by 100% usury!

One man tells me that clearly, he knows he would have to offer me more silver, to accept a payment of silver 100 years from now, that's self evident to him. But what is not self evident to him is that I will not choose to have my children enslave his children into payment, no matter how much more he offers me! He just doesn't understand the implications of usury.

Bottom line: I don't want futures. I want silver! And the two are not the same thing. Never were. Never will be!

So, what's next?

The shortages will lead to higher prices. Probably shockingly higher prices! The shortages will cause others to buy silver from the paper market to sell at big profits to the real market. People are considering opening up new mints to meet market demand. The market will break the back of the manipulations. The low price is temporary, and it is ending through higher prices for real silver. Eagles are selling for $4.00 to $4.50 over spot at the major wholesalers now, and up to $20-24/oz. at ebay for tubes and individual Silver Eagles!

Shockingly, some people still deny that there is a shortage. They don't see the evidence because they have not seen it on their news, because they have not been to their coin dealer, because they don't know the statistics of the silver market, and because they don't understand the economic implications.

Here, then, are reports of the worldwide shortage of silver that is here now, worse than ever.

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Before I list them, there was one report in particular that I was looking for, and I apologize that I cannot share it with you now. It talked of a coin show of 65 dealers. Before the show, they were all trying to buy silver from each other, but nobody had any. The man who attended the show left without any silver. 65 dealers! All sold out of silver! Source

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