Embry on Gold

I'm sure many of you have seen this already but someone preaching a little hope for the gold market is good for morale in times like this.



There is much speculation about the Dec contracts for both Gold and Silver, I personally don't see an actual default in silver because of the monthly delivery limits but it should be noted that Comex stocks have shrunk by a couple of million ounces recently and probably at least half of the silver they claim to hold is not deliverable. This means the magic number is not 130 million ounces but more like 65 million. If the November contracts can lower stocks by another couple million ounce than December could be that make or break month for silver. If December, which is a normal delivery month has more demand for delivery than the COMEX monthly cap then we could see panic and a run up in paper prices. Let's hope!


Apparently the Canadian mint has added a new product to the silver mix, an 800 oz plus or minus rough poured bar that is small enough to meet standard U.S. Postal shipping requirements. I don't know who else has these bars but they are available from CMI Gold and Silver, read about them here. I can't tell from the CMI site if they ship to Canada or why we've not heard about this new Canadian mint product available in Canada. Anybody heard of these locally?

I've been asked what I've been doing and it amounts to drinking, cursing and waiting. I don't have much liquidity left so I cannot take a contract, I can't find product or at least not as a reasonable premium, (10 oz bars for $200 Canadian)and I'm not desperate enough to mug people for jewelry... yet ;)

I have been averaging down on some cheap juniors including, Golden Tag, Silver Corp, Great Panther, Olympus Pacific, and New Guinea Gold, all because they are producing something or are on the verge.

I have to admit that anybody 2 years or more away from production are quite likely going to go bust or get bought out for pennies on the dollar. It sucks but it's highly likely that the majors with liquidity are going to go on a discount feeding frenzy.

With all this bailout money flying around why the hell can't governments put together an agency and offer financing to the juniors based on merit of the resources. At some point bags of Asian reserves are going to steal all the potential resources from the Americas if the majors don't do it first. The holders of good exploration company stocks will get bent over the bottom bunk like some bad prison movie.

My last market play was in the HBP Gold Bull, which is supposed give you a 2x multiple up or down with the price of GOLD. I believe we are in the gold bottom, (way over sold) and I think we are very near U.S. dollar top. Anyone who thinks a country who just raised it's debt obligations by 1.5 trillion in recent months is a safe haven is an imbecile striving to reach idiocy. U.S. interest payments will soon approach a point of default and even the mighty IMF will not be able to intervene leaving the printing press the last resort.

I think it's time for the people of western nations to go home, hug their kids and explain Santa is not coming this year, and perhaps never again.

World markets to be closed?

The always blabby Italian Primer Minister suggests the world markets may be closed to "rewrite the rules of international Finance" Yikes

Remember my last suggestion to stock up on supplies and cash, don't wait!

Friday's Frenzied wrap up

I’ll be glad when the election is over and I can go back to saving my financial ass before it’s too late.

Just today Canadian Finance minister Jim (I Can’t Count) Flaherty who has a long history of being able to make any surplus into a deficit, announced the purchase of $25 Billion in mortgage paper from the same Canadian banks he claimed just hours before were perfectly sound.

The Conservative party of Canada has been shown to be full of gun loving, god spewing, homophobic racists which is bad enough but they have been lying to Canadians for months saying that we are isolated and free from the contagion created by the U.S. credit flu. Get this people, everybody except a few Amazon natives who don’t use money are in danger.

This latest move to bolster Canadian banks is sold as a liquidity measure but we all know this is a solvency measure brought on by the vaults of bad paper eating into the bottom line of all financial institutions.

AIG having burned through a good portion of its U.S. Gov lifeline money ($70.3 Billion out of $85 Billion) has convinced the U.S. gov to up its credit line up to $122.8 billion, good money after bad in a seemingly endless nationalization of risk.

Iceland is virtually bankrupt with its banking industry carrying 7x the countries GDP in debt. Several of the Banks have been nationalized and foreign depositors who flocked to Iceland's high interest rates are going to get nothing


The U.K. is approach to government bailouts is buying an equity stake in all their banks, an approach the U.S. is also looking at taking.

I wanted to do an entire post just on last week's Cambridge House resource show in Toronto but since I'd not recommend any stock purchases until this all blows over much of what I saw was irrelevant. There was certainly a smell of fear in the air at this show and a number of U.S. speakers actually broached the ideas of prolonged depression, U.S. collapse, the death of Fiat money and impending U.S. marshal law to thwart the coming election. Unlike previous shows I've been to, people were buying these stories this year.

Everything is unwinding so fast neither Governments, Banks, Markets, Investors nor the poor unworthy blogger can possibly keep up.

The Big U.S. bailout money has not yet been spread around to the banks and I don't think they've even decided who gets how much, this leaves them still very vulnerable. That said I fully expect the FDIC ninjas to be out in full force this weekend with multiple bank failures caught up in their own problems and backlash from the Icelandic meltdown.

This could be the big ones folks and there is only so much you can do to prepare this late. As a commenter mentioned and I’ve believed for a while we could be facing a prolonged bank holiday where little to no commerce can take place. Stock your pantry, have an emergency water supply, have cash or extra barter goods at home, if you can still find any buy silver or gold, and if you are even more paranoid, leave major cites and buy an extra box of shells for your weapon of choice.

There are certainly a great number of issues I want to touch on but do not have the enough time, Instead I would ask you to watch this very interesting and scary clip that every one of my American readers should at see. Internalize it or ignore it as you see fit but please watch.

The Winds of Change

WaMu and Wachovia have both been gobbled up by other banks, in both cases ultra fast deals were slapped together in order to prevent a bankruptcy that would collapse the FDIC balance sheets. I don’t know if these were good deals for the buying banks but I do know they were seen as necessary for political reasons, if only to keep the lid on an every growing problem until the U.S. gets through this election cycle.

Despite these backroom deals and the attempted $700 billion bail out the contagion continues to spread as Iceland nationalizes a major bank
As does the U.K. with Bradford and Bingley

There will certainly be many more of these deals to come and as time progresses they are becoming more convoluted as the government, or agencies like the FDIC end up taking equity positions in either the failed companies or the purchasers of these companies as a method to fund the takeover and/or backstop losses that could well end up being more than these rushed purchasers bargained for.

It’s amazing how fast things are moving, WaMu failed on a Thursday which is unprecedented to date. After all the other failures have been Friday after closing so the FDIC ninjas could swoop in without spooking the market and allowing the details to be finalized and publicised while the markets were closed. This one was so desperate that they could not wait a single day longer to do the deed, harsh times indeed.

It’s good to see people are walking finally up with protests on wall street, people calling their leaders, tearing up talk radio and the blog sphere but this is far too late to save the system and perhaps too late to save themselves. When the bubble was inflating few said WTF are you guys doing? Few asked if they could really afford that house, fewer even questioned the soundness of banks that gave mortgages without asking for a work record. Now they are all up in arms and outraged that their stupidity and apathy on all things financial is going to give them a $700 Billion bite in the ass.

People get the government (and apparently banks) that they deserve. Lazy, ignorant people are destined to get corrupt or incompetent leaders. Democracy only works with a well educated and vigilant population, considering more people know who Dr Phil is than Ben Bernanke, and only 60% vote there is not much else to say!

The shit is finally hitting the fan and people only have a very short time prepare. Had the bailout proposed passed, (it just failed in the house minutes ago) they might have held things together at least until the end of the election cycle, now however all bets are off. The market could freefall; and we could see runs on banks and civil insurrections as the next topics of presidential debates.

Either way however the U.S. is in dire straits had this bailout passed or the soon to be seen Son of Bailout passes, the U.S. will be monetizing corporate debt and heading for a insane inflationary spiral.

If this stays as is with no bailout then the banking system freezes up and a different but just a destructive set of events will unwind. Either way the U.S. is in for a world of pain and Canada and the world by contagion will get roughed up too.

On the Canadian side I know people on the mortgage floor of some big banks and there is real panic in the air. No one knows what to do and they fluctuate between panicked actions to total inaction. Of course once you hear things like the Chinese Government has told its banks not to make any more bank to bank loans to American institutions you can see why there the mood is turning from sour to putrid. I’m also noticing very high hits on both my site and the ads despite my limited posts of late. (very busy with Canadian election)

What really strikes home is how many people who ignored my rants have suddenly started asking questions.
“What’s this about failing banks?”
“Tell me about this silver thing?”
“You said a depression is coming and some guy agreed with you on the news last night, what does it mean?”

It means prepare for the worst because no one can tell for sure what is going to happen, especially in the U.S. Stock up on food, have a little extra cash on hand, some gold and silver and stay away from protests and riots.

I would also say to Canadians that one party in our election still claims the financial crisis is contained and won’t affect Canada. This party is either lying or too damn stupid to remain in power. Beware!

AIG: The destruction of the American financial system?

This is what I've been talking about for the last 2 years boyz and girlz. The potential last straws, the triggers that could bring the American empire to a thundering halt. Lehman and Merrill Lynch were certainly on many peoples watch list and it was no surprise that they both met their demise in such a manner.

I'm glad however that Merrill at least made an effort to save something for the stock holders rather than follow Lehman Brothers in a Wall street suicide Pact.

The Lehman collapse was so much different than Bear Stearns debacle, Lehman Brothers was apparently ruled "not to big to fail" so while the government types tried to broker them a life line they personally refused to step up to the plate, perhaps the first good decision this dolts have made in 5 years.
It seems Lehman was chosen as an example, a line in the sand to warn other not to expect the largess Stearns received. Unfortunatley, this line in the sand was so small and ethereal that the Fed tripped over it today not 48 hours later. Bwahahaha!

In the mere course of 2 days we found out AIG was in trouble(no surprise), that Poulson said "no more bailouts", that AIG hired a bankruptcy lawyer and suddenly the blink, The Fed backs down offering a 85 Billion dollar loan to AIG in return for a major equity stake in AIG.


So is the end today? no! probably not! But this does support my belief that we are just one serious event, one black swan away from the financial Abyss, and the U.S. government for all its lying bluster by Bush, Bernanke, Paulson, and McCain knows this and you should realize this too.

An AIG failure would have been big enough to cause massive damage which if uncontained could unravel the entire market. I have no doubt tha containment would have been impossible, and by their actions the Fed agrees with me.

The Fed has just admitted they will blink, lie, bail and privatize what ever it takes to hold things together just a little while longer, probably at least until the end of the election cycle; but be warned, if they continue this sham beyond that time frame monetization of debt, dollar destruction and hyperinflation are the likely result. A particulary sad fact is neither of this year's Presidential candidates has the balls to do what needs to be done and default or hyperinflation will eventually prevail no matter who wins. RON PAUL , where are you ???? I am in fact NOT a libertarian but I do believe he's the only person in Washington who even has an idea where to start with this mess.

I know metals have been brutalized (despite the growing retail shortages) but this is not time to panic, we've made the right choice in purchasing real money, a physical asset that governments cannot counterfeit. HOLD ON A LITTLE LONGER and we will be vindicated.

Canadian exposure to these toxins are starting to be reported, here, here

Nouriel Roubini's view of developments