Wednesday, December 03, 2008

Silver Certificates and failure to redeem.

One of our fellow Silver Bugs has come to me with a problem about the redemption of silver certificates in bullion (not money), and he and I would like your input.

I'll let him tell the story in his own words then we will look at the text of the certificates and discuss what is happening here.

Nov 29

Good day "lord of wealth"
I purchased a 100oz silver certificate from TD Canada Trust a couple of months ago. Ever since, I have been having a heck of a time getting it "redeemed" - not cashed. After a lot of BS, and finally making the trip to T.O. I was told that they do not have to provide me the silver because the circumstances preventing them from giving it to me, are "beyond their control" (As per term 1 on the certificate) This despite the fact that I pointed out a number of sources for 100oz of silver, albeit above spot price.
Who would you think would be a better contact for me, The RCMP fraud unit, or my lawyer? Is there any interest for a class-action suit in the silver certificate holding community?

Dec 2

I contacted TD, and they informed me that they are making the calls now.
Never the less - I have attached copies of my certificate. I am interested in what others have to say about the bank's obligation to procure the silver, based on the conditions listed

Dec 4
Well, LoW. I went back to TD Canada Trust to surrender my silver certificate, and they said didn't have any silver. I then explained to them that rumour had it that Scotia Bank received 30,000 ounces of silver that morning. The securities dept told them that ScotiaBank wouldn't sell them any silver.
Once again, I explained my position, and told them threat they were in "breach of contract" and that it was not acceptable. I was asked if I would like an explanation from TD's legal dept, to which I said yes.

Within the hour I received a call from the branch with a proposed compromise. I would purchase 100oz of silver from ScotiaBank, and TD would buy my certificate for the cost of the silver.
I agreed, and the next morning I purchased 100oz of silver, and brought the receipt to TD. Which they said that they would deal with during trading hours the next day. Everyone's happy right???
TD calls me this morning, and tells me that they won't refund me for the silver - They claim that they will not buy coins - only bars. (I wish they would have told me this earlier)

Long story short... I now have 100oz of physical silver being delivered by ScotiaBank next week, and a contract with TD that they refuse to honour....

(does) Anyone else hold worthless silver certificates from TD that they want redeemed for silver?

Any interest in a class action against TD?

I contacted the OSC today, and they don't know too much about these certificates, but they did give me some more leads. I contacted TD's ombudsman this afternoon.

click on certificates to enlarge

The clause used to justify non delivery from paragraph 1 under the conditions on the back of the certificate states

“The holder of this certificate accepts the risk of non-delivery for any reason beyond the control of the bank”

While not explicitly stated I believe they could be baulking on delivery for one or more of the reasons below.

1. They may not actually have any silver to back up these certificates, in any size, shape or brand let alone highly desirable 100 oz bars.

2. If they do have bars they can't find any to fulfill redemption in the size requested.

3. If they do have bars they do not have the means or want the added cost of reminting 1000 oz bars into the desired size

4. While they can find 100 oz bars on the market they don't want to pay the difference between the questionably low spot price they sold the certificate for and the real price reflected in the physical metals market.

5. The certificates are issued with enough conditions that the banks don't feel the need to honour redemption.

6. The banks know they can create enough road blocks and stall the process until "most" people settle in paper.

7. Add your own theory, because I may have missed something totally logical and innocuous

So does

"for any reason beyond the control of the bank"

under these circumstances justify a lack of redemption?

I would think not because there is silver on the market if you are willing to pay the price.

If the TD chose not to back their certificates with real silver, should investors be penalized for TDs poor business decision?

If they did back all of the certificates or at least backed some portion of them on a factional basis, should they not have made reasonable accommodations to maintain a supply of common sized bars to meet redemption requests?

If supply is so tight that TD knows it cannot redeem the certificates they previously sold should they be selling more of them?

This certificate was only sold a few months ago and considering the inability of getting bullion in many sizes this year should the bank not have know it was not redeemable then?

Was our friend told redemption was next to impossible when he bought it?

The certificate clearly states you can get physical redemption. The banks failure to adequately back up the certificates with deliverable silver does not seem to be "Beyond their Control", in fact it was entirely in their control. They chose not to buy the physical silver they offer to redeem, or they chose not to have the sizes and shapes that represent the average client purchases.

Another issue is the yearly fee stated on the front of the certificates. GICs, term deposits, bonds etc do not have such fees so the reasonable assumption to make is this fee must be represent a storage fee for keeping your silver safe and dusted. Since silver and gold bullion are known to have storage costs, is this not it?

If not, what is the fee for?

Either way it looks bad, silver and gold take up space and it's practically universal for banks charge a fee to store bullion. If there is no fee there is probably no metal. If there is a fee, there should be metal. So naturally when there is a fee and no metal at the same time something would seem to be wrong.

TD itself is rather confusing on the whole issue at one point they say
Free Safekeeping
TD Waterhouse provides free safekeeping on all securities, except gold and silver certificates. For your convenience, we recommend your securities remain in our TD Waterhouse account at all times. That way, you will not have to monitor delivery deadlines and make repeated trips to a safety deposit box.

Notice they say safe keeping of securities not assets, so is the fee for storing their copy of the certificate, or the metals?


TD Waterhouse offers several investment alternatives for clients who want to take a position in precious metals, but don't want to worry about the storage costs and insurance against theft that are usually required when purchasing gold or silver bullion:

So here they are saying you can buy certificates to avoid fees, yet the certificates have fees stamped on their front.

I'm getting confused.

If a bank is charging you a fee, which (we believe) is for storage, should they not be storing something? If they are storing something for you should they not be able to identify that item or even better deliver it to you?

Is this the same issue I related to you last fall when Ted Bulter wrote about Morgan Stanely settling a class action lawsuit for not buying metals to back certificates and charging a fee to store nothing?

One thing I did notice, While the certificate mentions redemption and conditions on redemption at no place does it ever specifically mention being backed by silver. By calling it a silver certificate it's implied they are backing it with silver but nothing on the certificate actually supports that belief. I'd like to ask a bank's investment advisor if they are represented by real metal or not. Do they even know what they are selling?

Now it's unclear at this time if this particular certificate will get redeemed. TD has moved somewhat to placate a pissed off client but there is still no satisfaction and there are some bigger issues that this single 100 oz certificate.

What about all the others who have these certificates?

What if they also demanded bullion?

We need to know if TD, Scotia or any other bank that sells silver certificates have 100% bullion backing for their obligation?

If not how much backing is there?

If not why are people asked to pay a yearly fee?

If not what are they doing with money that should have purchased silver? Investing it elsewhere and hedging against the silver position in the futures market perhaps? Are they betting against your investment by going short silver?

Is there even enough silver on the market to cover all the obligations created by all the banks selling certificates?

Is their ability to redeem gold also suspect?

If they do not have the metal, how much money have metal investors lost because their purchases never impacted the demand side of the price equation?

It's quite possible given the revelations in the Morgan Stanley case that 100s of millions of dollars, industry wide, that should have been soaking up silver and gold ounces never did so, robbing investors of the appreciation the added demand would have caused.

In Morgan Stanley's case 22,000 investors believed they had bought silver and gold (not a promise) and then adding insult to injury they were charged to store it. Even $1000 for each client would have added $22 million to metals demand. Now consider many of these people had much more than $1000 dollars in certificates and there are many more banks than just Morgan Stanley offering these products.

Metal investors need to go to their banks and demand redemption or proof of backing for their metal certificates. Ask for your serial numbers. I know Scotia is annal about recording those numbers when you buy physical silver so why don't banks give you the serial numbers associated to certificates, or at least a list of all the bars they hold backing the certificates

Canadian metal investors need to group together and go to the government, the OSC, the RCMP and the Press asking the above questions and demanding a full accounting of banks metals obligations(certificates) vs. their backing (bullion).

If we get deficient answers, this should move to court.

Your opinions on the issue are welcome, Am I missing something?

If anyone is in a similar situation and wishes to organize with others, email me and I'll arrange contact with other concerned investors.

For anyone trying to redeem a certificate ask the right questions and argue that failure to back their certificates with the metal they promised was most assuredly under their control and you require satisfaction.

Tuesday, December 02, 2008

The Great Silver Safari, leads to a trophy.

A rumour came across my desk this morning that there was wild silver roaming the streets near my place of employment. Always ready for a challenge I donned my fiat currency patterned cammo, grabbed the Save the Orphan charity box from the local Tim Horton’s and proceeded into the wilds of downtown Toronto in search of elusive silver.

The light dusting of snow aided little as the small foot prints of silver rounds were soon stomped out by the great cloven feet of bay street executives. Being unarmed and without the protective powers of a six digit lawyer (or is that 666 digit lawyer) I skirted around these bestial creatures with their pointed horns, acidic drool and fetid breath.

3 times I walked up and down Bay Street until I heard the pure ring that only a silver coin can produce right in front of Scotia Plaza. Keeping near the walls and shadows I worked my way towards the currency desk, crawled past the security guys who always give me that “you’re not dressed well enough to be in our bank look” and finally standing and sprinting to the head of the forming line of other wild eyed metal buyers.

Things were looking good until I realized I had just picked the smuggest little shit of a teller I’ve ever encountered in 4 years of dealing with metals. He did not want to chat about the metals market, he told me that there is no shortage just no small bars(duh, the market wants something and it does not exist, to me that is a shortage), he would not tell me how much the received in the recent shipment, I did not even bother asking about what was selling and what was not because he was just too snotty.

I told the teller I write on Silver and I wanted to know how much they had before I informed my readers to drop by and he responded, “Don’t write about it we don’t want a panic in here” Well mister snotty, I hope I do have enough local readers to cause a panic and I hope they all lecture you about the realities of the silver market.

What really mattered however is I bagged the silver, the hunt was successful and I can tell you Scotia Bank received a load yesterday of brand new , 2009 Silver Maples and if the past is any guide it was probably in the range of 30,000 ounces, which lasted 2 weeks last time they got them in.

They also have Scotia brand 1 oz silver bars which should sell a little cheaper and be PST free compared to the Maples. MR smug also claimed big bars were not in shortage so 1000s should be available.

I can also tell you with some certainly that Scotia has gold bars and rounds in 1oz and fractional sizes because I saw them being sold, this a.m.

I hope this little find will be of use to my local readers and please DO cause a panic at the desk.

I also wanted to thank all those who voted for me last week and let you all to know I made the final round of the Canadian Blog Awards coming in the top 5 of 22 nominees.
For those interested please drop by and support the only real money blog in the running this year,

Good hunting

Tuesday, November 25, 2008

Real money at the Free Lakota Bank

Another interesting silver story to look at this week is the Free Lakota Bank. While the U.S. has thousands of banks, the Free Lakota Banks uses a business model based on Real Money (gold and silver) making it unique from all the other banks I've ever heard of.

Highlights of the bank

1. Savings are in silver and gold offering protection from inflation and devaluation of fiat currency

2. No fractional banking so the bank is liquid at all times and you may withdraw your savings in real minted rounds on demand

3. You pay to store and protect your savings wealth, rather than loaning your capital to a normal bank so they risk as they see fit

4. You may assign any portion of your savings you want to a GIF (general investment fund), from which standard and micro loans are made, current rate of return on the GIF is 7.24%

5. Good loan criteria

6. They have damn pretty rounds

One of the best things I like about this bank is their take on loans applications. This is from their site.

Do you have the moral integrity and character of a person that deserves a loan from the Free Lakota Bank? If so, we may have a loan for you. Our first priority with the Free Lakota Bank General Investment Fund is to enhance the profitable development of exports from within the Nation of Lakota. We will consider any and all proposals to establish free enterprise within our territory above all other requests for loans. Please read the list of benefits of conducting business from within our Nation.

The Free Lakota Bank issues loans based not on need, but instead on merit. During application, explain the value we will receive by lending money to you. Inform us as to why investing in you is in our best interest. What have you done in the past to create value for yourself and shareholders? What commitment will you make to ensure the success of our investment?

Apparently I want a big screen or I want to go to on vacation will not be a valid loan rational (about bloody time) It looks like they are limiting loans to things with will generate real wealth and opportunity for the community rather than fanning consumption like normal banks. I like it!

I’m a huge fan of the good work done by Micro credit organizations like the Grameen bank that seek to empower third world women by letting them escape loan sharks and other exploitive financing arrangements. Micro loans also allow them to gain a greater level of Independence.

The Lakota coins will also be real currency redeemable at various AOCS tribes or merchants. AOCS stands for American Open Currency Standard a loose grouping of alternative currencies including the Liberty dollar the Government raided and closed this year in what was probably an illegal action.

I hope the Free Lakota Bank can have similar success in stoking job creation and local economic autonomy in the Lakota lands and I also hope that once they get this up and going they will mentor other native groups in “real money” finances.

Now I don’t know these people and I’ve not seen their books so I cannot endorse the Free Lakota Bank but I certainly approve of this kind of business model and hope it flourishes. I do recommend you check them out but do your own due diligence.

Damn pretty rounds!


Only a couple days left to vote for the Canadian silver bug as the best Canadian blog in its category

Sunday, November 23, 2008

One miner gets it right by selling their own silver bars

I think I mentioned in a earlier post that First Majestic Silver was going to allocate some of its silver production to a mint in order to bring their own branded rounds and bars to the market and capitalize on the discrepancy between paper and physical prices. Now I admit I was not paying very good attention and apparently the product and site was launched some time ago without me noticing, ooops;)

As you can see from the pictures above they are offering a selection of quite attractive proof rounds in 1, 2, 5, and 10 ounce sizes as well as a lower quality "business strike" rounds all made by Northwest Territorial Mint.

At this time the prices are based on $14 dollar silver with $1-3/oz premium on the proof pieces but at least they do have the 1, 2 and 5 ounce sizes in stock Unfortunately I missed out when they hit the market because I probably would have bought the minimum 20 round tube of the business rounds, which are currently sold out. I also think the display set of the 4 sizes of proof rounds would have been worth buying just cause it's pretty.

For the average investor the important products are those marked coming soon, a 5oz, 10oz and 1kilo ingot bar which are popular sizes that are nearly impossible to find. The other plus is they appear to be selling only product they actually have in hand and are not taking orders they will not be able to fill for months, hence the sold out status of several products. This is the kind of honest business practice and I expect from all dealers.

I applaud First Majestic for doing something that everyone else should be jumping on and I hope this prompts others to do the same. Of course current mint capacity may not be up to it but maybe the increased demand will drive some expansion. Even better why not get a bunch of mid tier companies together and creating a minting cooperative. Or why doesn't Silver Wheaton do something value added to the discount silver they buy?

I should note that Pan American has sold rounds and bars at Northwest Territorial Mint for a long time slightly closer to spot prices that these products, however due to market conditions you must wait months for delivery. So it's up to you, how much will you pay to get what you want now, vs. paying for it now and waiting months for delivery. With the instability in the markets I don't like leaving my money with anyone for months at a time with promise of delivery later. The current premium asked on these products is quite fair considering some of the prices I've seen on eBay I would definately buy these.

I hope this is useful to anyone eager enough to pay the premium. If any of my friends or family are reading this, anything offered by Majestic will do just fine for Christmas. One once of silver is worth infinitely more than more sweat shop clothing or a gift card from a company verging on bankruptcy. Of course a grain mill, column still or hobby farm will be accepted willingly as well.

Now that the business rounds are back in stock I've just made a modest purchase, I hope to report a trouble free transaction and delivery. You might also note the 5,10, kilo bars are also available

Shameless Canadian Silver Bug plug

As you can see from the sidebar I was the second place winner in the 2007 Canadian Blog awards in the now defunct Best Business/Finance Blog category. Unfortunately they did away with this category and I apparently have to run in the best Professional/Career Blog this year against teachers, lawyers and a theoretical plethora of plumbers and used car salesmen.

Despite this category not being a good fit for a non professional, non career centered silver, gold, finance, economics, world collapse blog I have been nominated and if you read, learn from and enjoy the Canadian Silver Bug's banal gibberings I would appreciate the vote.

I know my hits, revenue and comments are up this year so I hope you actually like what you see and will vote. Each person is allowed one vote in both the first round of voting up to the 29th and again in the second round after the field has been narrowed.

I will repost the link next and plea next week should I move on to the second round. Stayed tuned I do have a real post coming later today that might find you some silver to purchase. If you don't vote for me I won't tell you who has silver, bwahahahahahaha! ;)

Monday, November 17, 2008

BCE A Capital Gains Headache

If you are one of those many many people who own BCE stock you've got a potential capital gains nightmare heading your way.

Imagine the worse case scenario that you are a long time Bell Canada Pensioner and you own 10,000 shares bought over a 40 year career and now you are being forced to sell due to the impending take over by the Ontario Teachers Pension Plan and some miscellaneous U.S. equity funds, (aka assholes.)

From talks I’ve had with people in this situation they think they can just find or guess the purchase price of their shares and claim the capital gains. This would be easy, straight forward and ultimately preferable to what really needs to be done. This route however will probably get you a Revenue Canada audit so far up your ass that they can count your teeth. The BCE takeover is big, high profile and a great opportunity to grab taxes in a year heading for federal deficit. With that in mind I expect all large BCE transactions to be flagged for extra scrutiny and considering the complexity of calculating the capital gains they WILL find many erroneous or fraudulent claims.

So what really needs to be done?

Well first you have to find or estimate your original purchase price for any particular year , this site of historical BCE prices will help you out if you can't find your purchase history.

(Remember however you should use your own receipts to get your starting purchase price, I’m using the charts as an example in this case and would only use them on a tax form if I could not source the original information.)

Next you have to take that original purchase price and modify it for any transactions that would alter the “for tax purposes” purchase price such as stock splits and company spinoffs

Share Splits
• October 1, 1948 (4 for 1)
• April 26, 1979 (3 for 1)
• May 14, 1997 (2 for 1)

Nortel spin off
Aliant spin off


In Jan 1983 you bought 100 stocks at 24 and now must sell for $42.75
One would think it’s as simple as stating you have $18.75 a share capital gains x 100 shares for a declaration of $1875 on the transaction, but it's much more complicated than that

The 1983 shares in the example need to adjusted for the 1997 (2 for 1) stock split, divide the cost of these shares $24 by the split multiple (2) making your real price $12 rather than $24. Capital gains just jumped from $18.75 a share to $30 ($42.75-$12) up to $3000 total

Then you have to account for the spin out of both Nortel and Aliant

Nortel was originally priced as worth 69.21% of BCE (yeah I know, keep laughing Mr Roth) and the remainder of the company (the part not near bankruptcy) was worth 30.79%

So now your original $24 dollar shares are now worth $12 x.3079 or about $3.70, Capital gains is up to $39.05

For shares older than 1983 , BCE provides a chart of monthly average prices already accounting for the splits, The oldest, cheapest stocks are in the $6.60 range when adjusted for Nortel brings them to about $2, giving you capital gains of $40.75

“Holy shit”, for long term investors we are talking about captial gains that average about $40 per share, (gasp, turn pale, puke, as you see fit.)

Then you have to deal with the fact that you got 0.0725 units of the Bell Aliant (or its cash equivalent), and 0.915 consolidated BCE shares for each old BCE when they formed Aliant. I believe you have to take the value of the Aliant shares and convert them back into the cost per share against the original BCE shares Doh!

OK at this point it became quite obvious that I cannot do this without a tax specialist.

Now imagine the pensioner who has to go through this process for 40 years of accumulation in the company stock plan finding all the original receipts for stocks bought up to half a century ago and crunching the numbers above.

First you must think, “this is a mammoth undertaking, which I can’t handle!” and then you think “ I’m screwed!” This is going to take away my dividend income, I’m going to have a good portion of the premium on the purchase price taxed away, and the final annoying fact, this could push me into a new tax bracket and as a result most or all of the OAS (old age security) will be clawed back.

If you are in this situation know this, Revenue Canada will probably flag large Bell Canada positions for audit, especially those who don’t submit reasonable capital gains numbers. As you can see from above rough calculations long term holdings will have severe capital gains, his is not a good year to start lying, they will notice.

Now there are things you can do like gifting shares to charity, (move fast there’s little time left) or clean the losers out of your portfolio , the ones you know will never recover (Nortel anyone) and book your capital loses to offset BCE. As for the proceeds of the sale, perhaps I’ll discuss some other dividend companies that I like closer to the sales closure.

While you only get taxed on 1/2 of your capital gains in Canada, I can see people taking a bit tax hit. Be prepared and keep some cash back until after tax time or put 20% in a 3 month GIC until you see your tax bill.

Disclaimer: This is only my understanding of how these calculations work so please don’t take my word for it. Go to a tax professional and have this done properly. This was simply an exercise to show you the complexity of capital gains issue with regards to the BCE purchase and probable tax hit you might be facing.

Saturday, November 15, 2008

Bring on the Morphine, I feel the pain coming on

There is a massive tidal wave of unemployment beginning to break over the coastline of the Americas and what we are seeing is just a hint of the horrors it will bring. This week's initial U.S. jobless claims have spiked to a seven year high of 516,000, up from last month and up massively from last year at this time.

Now consider how many seasonal retail jobs simply won't manifest this year due to the slow down and how many positions, or in fact how many stores will simply evaporate after what I expect to be one of the weakest Christmas seasons in in decades. What we see now is not the Big Bad, just a blur on the horizon of what's coming.

Statements backing my belief this week warn of tens of thousands more jobs cuts in the near future , Citigroup 10,000 as of last Friday now up to 75,000 by a story today ,
Sun Micro 6000 and in Chicago massive layoffs from local corporations have been warned

Meanwhile we still have GM, Ford, and Chrysler who are all screaming for money and in danger of failure which will cause unbelievable ripples. The derivatives linked to GM alone are suspected to be worth about $1 Trillion which would probably finish off the counter parties whoever the sorry bastards are, add to that 3 million or so lost jobs and you've got a mega crisis.

The problem of course is political suicide, people are getting tired of bailouts for screw up companies and it is questionable if new money can actually fix the car maker's problems. It's also questionable if the Gov can afford this endless corporate welfare. Finally, at the G20 today it was mentioned that any bailout would have to pass EU scrutiny lest it be declared an illegal subsidy and prompt some form of trade dispute.

So do they throw money they don't have on a fire that can't be smothered, risk national bankruptcy and trade sanctions wars to maintain a dysfunctional industry and millions of jobs peak oil will eventually kill anyway, or do they allow the GM derivative bomb finish off the world financial system. I'm tempted to go with the later only because even after a bailout there are many reasons to believe the car companies will still fail, just delaying the crisis.

On the Canadian perspective our most recent job numbers were actually up but those were padded with many thousands of temporary jobs resulting from the recent pointless Federal elections so we should expect some job loses despite the holiday shopping season. Car manufactures and part makers will suffer huge job losses with or without immediate failure.

As it was in Washington this week the American car makers plus Honda and Toyota were all groveling for cash from both Ottawa and Ontario, but so far have received nothing. It's happened too often in Ontario that money has been given for retooling to save jobs and a couple of years later they are back for more or close the plant regardless of past promises. The Big 3 have mismanaged their companies, misforcasted customer sentiment, fuel cost and finally engineered crap that barely met the Korean standards let alone the Japanese. If Canada is to fund a car company make it ZENN.

There seems to be little to be cheerful about in housing either where despite claims the banks are renegotiating mortgages to let people stay in their homes vast numbers of houses are still being lost, in fact 85,000 in Oct alone.

It's no wonder Fannie and Freddie $29 B and $25 B respectively this quarter.

Now this video gives little real data but it certainly gave me a "What the hell are people thinking" moment.

In Canada both home sales and prices have finally dropped as I predicted and I hope those people I tried to warn off making that first home purchase in the last two years won't get hurt too much. All I have to say is your agent lied, houses do go down in price, even in "that" neighbourhood. While the most exotic mortgages varieties did not show up in Canada a fair number of people did take 0 equity or 5% down with secondary financing for the down payment..Ouch! In this kind of correction even 10% down may not be enough to keep people above water for long.

With Peak oil here and depression predicted on FOX of all places , (in fact bigger than the Great Depression was predicted), perhaps my hoard of metals will eventually perform as I expect and I'll scoop up that little hobby farm, commune, bunker, life raft at a price I can manage.

You know when FOX stops fluffing their corporate puppet masters and lets this on the air, it's already well past probable.

It sometimes seems it's already past the "you can't save yourself point" and while it is getting more urgent there still is time to find a little gold or silver even at a high premium if you really want it. There is also time to pay debt and start cutting back on your lifestyle before your lifestyle starts cutting back on you. There is time to buy some books on canning and gardening as well as some seeds and tools at the end of season tables, so you are ready in the spring. There is still time to call family and set price limits or quit gifting, or at the very least demand necessities not frivolities.

It's going to get bumpy folks, I wish you all well.

Wednesday, October 29, 2008

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.

Friday, October 10, 2008

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.

Monday, September 29, 2008

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!

Tuesday, September 16, 2008

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

Thursday, September 04, 2008

Demand the silver you want! Or make your own!

I have to say I’m rather dismayed at the market as such. The way I see it between growing nation debt, teetering banks, the imploding housing market, growing unemployment and the destruction of the U.S. hegemony there is no way the U.S. Dollar should be growing in strength.

An even greater injustice is the prices in the metals market where it is more and more apparent that physical silver and small sizes of physical gold are quickly disappearing from a massive rebirth in interest for metals investing. Yet prices reflect the paper fantasy rather than the physical reality of the metals market.

Talk here and other sites have been sparked interest in the ideas of a silver buyers cooperative(s)/buyers club or the creation of small artisan companies to acquire bulk silver in the form of trade bars(1000 oz) or silver shot (pellets of silver used in jewellery and industry) and convert this silver into the sizes investors actually want, ranging from 10 to 100 oz bars, (while many investors like rounds, the labour and equipment is much more intense and expensive to create uniform blanks and strike them with a 60 tonne press as opposed to casting a small bar)

These approaches are certainly a possibility but it’s going to take some work and some luck to find people interested in such ventures and those with the physical skills (foundry or metal working experience) or and organizational/legal skills to make this work. Of course there is also the need for a business plan that will prove that such conversions to small bars can be done within the current markets range of premiums between large and small silver.

Since I have nothing else to do between my full time job, 2 blogs, 2 hours of commuting/day, a family and my expected participation in a upcoming election campaign, I’m willing to act as a point of contact, organizer, sounding board for anyone else who is interested in such a venture. I’d also be willing to advertise for and sell (and buy for my personal stash) any product made buy such an endeavour. Should you or someone you know and can coerce is interested is this contact me. Ideally we could form such venture in both Canada and the U.S. to keep things simple regarding shipping and customs but one can be made to work.

Take the pole on the side bar regarding willingness to participate in such a venture

My second item today is to ask you for your help. Two weeks ago I wrote the Royal Canadian Mint asking them a bunch of questions and made some suggestions and I’ve received sweet F.A. as a response. I’d like others to approach them with similar queries to see if we can get some movement.

Plz don’t cut and paste, write them with your own thoughts and words.

Essentially what I said was

If you’ve been following the metals market of late you would know that there is a serious disconnect between the paper and physical price of metals, especially silver bullion. This disconnect is most obvious when you look at the higher premiums that silver bars are demanding vs. the current spot prices, demand is not being met and this premium is rising.
So, does the Royal Canadian Mint have any stockpile of small silver? (5,10,20,50,100 oz bars)

Will the mint release any such stockpile to meet this growing demand?

Is the mint currently making, considering making or considering increasing production of this type of product?

If not why? The rising demand for physical silver is allowing silver bars to be sold from 4-6 dollars an ounce above the current spot price depending on size of bar. This would seem to be an ideal business model where the mint could turn 1000oz bars or silver shot into highly demanded products at a 30-40% margin.

Since your mandate states
As a profit making Crown corporation, the Mint's mandate is to produce a fair return on investment for its sole shareholder, the Canadian government.

the mint should be embracing this opportunity to make a fast buck selling the public the silver bars there desire.

Send your queries off and lets see if we can get any satisfaction, thanks

Monday, August 25, 2008

Silver moments: Meeting another believer

I was milling about the Scotia metals desk on Friday waiting and waiting and waiting. It seemed there was quite a rush to acquire precious metals suddenly, driven by the dire warnings coming out the U.S. and the recent price collapse. A collapse which is obviously not supported by the level of retail demand we are seeing, as quoted in numerous articles much more eloquent than mine.

I went in about 1:00 with the intention of picking up a few of the last maples Scotia had in stock. A fellow hoarder/collector/bug told me he’d just picked up 15 in the morning and they were down to 70 coins from the 6000 they had 3 weeks earlier. Since I did not have any 2008s for my kids this year (My previous page of maples this year turned out to be 2001 resale product not new) I figured I pop over and get back to my desk in a reasonable amount of time, HA!

The line up was about 10 people long, which is not unheard of considering this desk also does currency exchange but there were also several people hovering about clutching the pick copy of their metals purchase, mmmm peculiar!

Quickly they announced that people wanting U.S. funds should go to a regular teller as they were all occupied doing metals trades, something I had never heard before. Of course the goof in front of me who wanted U.S. dollars refused to move lines costing me another 10 minutes.

Finally I placed my order with one a teller who must think everything is top secret refusing to tell me how many maples were left, or how much they’d been selling. I did find out there was nothing left in silver but maples and Good delivery Bars.

Because of her relcutance to give me any details I complained that the bank should have a plasma screen up where we could see metal quotes, bank buy and sell prices, and inventory levels for products at the branch. Like people want to wait 40 minutes for a quote or to be told there is nothing in stock, idiots!

With my order booked and paid I was told to go have a coffee or mill about as the fellow pulling the orders was behind and someone still had to go down, pick them up in the vault and bring them to customers. I opted to hang around and watch this group pick up their purchases, just to get a feel for what was being happening. I saw a youngish fellow pick up what was a I believe a gold Maple, as well as two older fellows with long beards and a hippyish feel to them who both picked up an envelopes, I could not see they were getting but it was small so probably also a gold coin or wafer.

What also struck me was the fact that it was not the usual elderly Asians doing most of the buying but rather a representive mixture of the population. Rarely do I see anyone my own age(mid 40s) or younger buying gold or silver.

While I’m watching all this another fellow walks over and says,” You buying too” gesturing to my receipt, “Getting 1000?”,

I responded, “ah No, I don’t have that kind of money, I’m just getting a few maples before they run out” , "I invested what I could a couple of years ago and now just nickel and dime when I can"

Turns out this was not his fellows first purchase and he’s there well prepared to take his Good delivery Bar home in a little piece of luggage with wheels and a handle, understandable considering the weight and lack of handles on a 1000 oz bar of silver. We exchanged a few words regarding Fannie Mae and Freddie Mac’s imminent demise, the FDIC Friday night announcements of yet another bank failure (see Columbian Bank and Trust failure this weekend), the abysmal supply of silver in Toronto, Scotias slowness and Kitco’s nerve taking money now and promising delivery later.

I was called away at this point to pick up my coins but I was very glad to have met another silver ubber Bull, glad that some people deep pockets are buying up the large bars I cannot afford and most importantly, I left suffering ingot envy.

Scotia is probably out of maples again by today but for any of you well heeled types out there 1000 oz bars are available. I don’t know how many bars they have other than the “lots” the teller reluctantly gave up. If you can swing the cost of one of these bars this is the best price per oz you're likely to see this year, the lowest premium and apparently one of the few games in town for silver buyers. Try to convince family members of the validity of silver investments and perhaps you can share a bar to make it affordable. I would with my family, if only they thought I was sane!

Friday, August 08, 2008

Looking for silver in all the wrong places

I've been having a hellish summer not just because of the weather but the expectation that I can manage a 2 1/2 person job alone for 4 of the last 6 Weeks, arggg.

This frenzied state has left me little time and too sore (carpal tunnel) to blog much recently, but since this was so important I thought I'd share it with you while I try to wolf down my Tim Horton's Chili (mine tastes so much better)

On the few occasions I've gotten away from my desk this summer I've bolted over to the Scotia Tower or the coin dealers to see who if anybody has some silver, for the most part I've come up dry. While Scotia did have 6000 maples 2 weeks ago they've had very few bars since winter and when they do they never stay in stock too long.

This week while on a jaunt with a fellow metals investor we went over to a Jewellery mall in downtown Toronto. This building has open vendors on the first floor but also has 16 more floors containing manufacturers, custom jewelers specializing in insurance replacement, gem importers, diamond setters and wholesalers and 1 lone refiner. ding ding ding, we have a winner.

While the powers that be make sure there is little to no silver available for us retail investors in the normal places like Scotia Bank they cannot allow the Jewellery industry to report shortages or the game is lost.

So guess what? I've found silver in many sizes, comparable prices to online retailers like Border gold and unlike Scotia they don't ask for 2 pieces of I.d. They do ask you name and number but since they don't ask for proof, what you tell them is your business. They also buy scrap at fair prices so you don't need the pawn brokers or outfits like the "cash man"

So for my few GTA readers who can't find silver you want to go to

21 Dundas Square
Toronto, ON M5B 1B7
(416) 363-0584‎

If you score big, send me a one ounce finders fee, or even a silver dollar.

For those of you in different cities I suggest that you find out where the jewellers buy their silver. Since I suspect the PTB will be reluctant to squeeze this market, they should be able to sell you or perhaps even order you what you want.

With this weeks correction, do it now and buy buy buy!!!

Friday, July 25, 2008

Yes we have no silver today- revisited

Months ago just after the price collapsed in silver and we all ran out to stock up , we came to the shocking revelation that despite all the bluster about growing inventories at the Comex there was indeed a retail silver shortage. Since that time we have seen Jason Hommel and his pissing contest with the Perth mint over delivery delays (on straight sales, and redemption of certificates into physical bullion) and if they mean they don’t have the all silver they Claim. Being a mere peasant in the big scheme of things I will take no stance on the issue as I don’t need to get sued. I will however state that we do know is that some companies have made it a practice to sell metal certificates and not back them, not only that they have the cojones to charge their clients storage on these invisible bullion bars. We also know that Morgan Stanely stated that charging storage on nothing is a widespread industry practice.

Next up was Mr Butler's belief that there is a large and growing shortfall in silver backing for the silver ETF based on the amount of short selling in SLV which dilutes the silver backing of the ETF because short sellers don’t contribute silver to the fund. The entire short position can be considered a silver shortage in the ETF and therefore a default in his estimation of 25-50 million ounces. The ETF as envisioned is a great tool for silver investment for those unable or unwilling to buy, carry and store silver but what started as a way to encourage demand is now diverting demand from real silver which would tighten the supply and make us profits. If the markets are allowed short SLV is has become a tool of silver manipulation and a failed experiment.

In the same shortage trend the U.S. mint is rationing Silver Eagles to dealers because after already beating last years sales volume they cannot access a large enough supply of silver blanks to maintain production at today’s level of demand. I’m rather surprised that the mint would not manufacture it’s own blanks and supply private mints rather than depending on outside supply?
What do I know!
At this point collectors, vendors and the Silver Institute have all called on the mint to meet its mandated obligation to fill the markets demand for the coin.

Locally we’ve had a dry spell for Maple Leaf silver coins which at least at Scotia Bank in Toronto has been cleared up with a recent deliver of 6000 ounces. The girl at the counter seemed to think this was an excessive amount but when this is the only silver they have in stock I don’t doubt the cupboard will be bare again within a week. The clerk told me they did have a 100 oz, 3x10 oz and a single old 20 oz on hand first thing in the morning but they were already gone yesterday by 2:00.

On a side note they must also be moving a large amount of small gold in the last couple of years encouraging Scotia to commission brand new Scotia bars in sizes from 1-20 oz as well as ¼, ½ , and 1oz rounds. You usually sell your old stock first so I have to assume that all the old Johnson and Matthey, and the newer Royal Canadian Mint bars they use to flog are gone. I need to get my act in gear and round up a little extra cash, I’ve always wanted a few Sovereigns and it looks like I’d best buy them soon before they too are all gone. Of course I’ll get those mail order form B.C. to avoid Ontario PST.

If you do buy gold for possible future transactions don’t buy 1 big bar, stick to 1 oz, fractionals if you can stomach the premium, Sovereigns or those cute little Mexican 2, 2.5 and 5 peso coins which are probably the cheapest way to get small denomination gold. Eagles, Maples, etc in fractional sizes cost to damn much.

What this comes down to is people are buying heavily into silver when they can find it. Despite all the claims and promises it’s quite obvious that there is no where near enough physical silver to cover all the paper obligations and the time to accumlate is soon to end. If each Silver investor can find just one more person and convince them that silver is the commodity opportunity of the century, we will have the buying power to bring this real but hidden silver shortage to the public’s notice and when that happens all hell will break loose. There may be a problem however, I think small silver is actually being pulled in and converted back to delivery bars. This allows the Comex to show healthy deposits and at the same time it pulls the appropriate sized bars for small investors off the market thwarting our demand and consumption.

It seems all we can do is scramble around and seize what supply we can, place orders, wait and see if they will get filled, but in the end if you cannot find enough silver DO BUY SOMETHING!, add a little gold to the mix. While many (including me) don’t believe gold has the same potential as silver it certainly is better than the fiat toilet paper world Governments are passing off as money.

Wednesday, July 23, 2008

Trying to catch up!

Well it’s been a while but I hope I’ll up to posting a little more often considering the rash of big news that’s broken recently. I’ve had some issues with holidays both mine and people who’s work I have to cover, summer apathy and a sore paw in the form of carpal tunnel that is making several fingers twitch uncontrollably and makes my wrist ache.

I got a couple of letters and facebook notes about my Independence day post but was rather disappointed that I did not attract greater attention or at least a little flame war to liven things up a bit, oh well, next year I’ll be blunter;)

First off I’ll take care of the blog accounting and gloating, not only did my prediction from last Nov of $140 a barrel come true but now that both investment bank Bear Stearns and commercial bank IndyMac have taken the big dirt nap , I can with no reservations say I’ve met that prediction as well. Of course I don’t expect that to be the end of the financial bloodshed for this calendar year.

So what’s next?

As I see it we are assured more bank failures this year and probably a greater number next year. The FDIC which has over 90 banks on its watch list says that 8 banks including IndyMac have failed this year. While both of these numbers are low compared to the tally after the S&L Crisis, the FDIC will be forced to use nearly 20% of it’s $53 Billion insurance fund just on the IndyMac failure. How long before they are maxed out and the Government is left with the job of bailing out the FDIC itself? It's interesting to note that some insiders are saying IndyMac was either not on the watch list or only added just late month, too late to help, so how indepth or accurate is this "watch list" ? I doubt FDIC has had enough staff or time to check a fraction of the banks so expect the endangered list to grow significantly, and more banks not listed to fail.

While I admit that most troubled banks will be considerably smaller than IndyMac, after seeing Wachovia ( $ 8.9 Billion) and WaMu ( $ 3.3Billion) post such huge losses this weak I have proof that the crisis is not over and that it is not just the little guys who are in danger of collapse. A mess of small banks and one or two more IndyMac size and the FDIC will be out of funds, and guess who will bail them out?


It looks like the legislation to authorize the Treasury Department's right to bail out of Fannie Mae and Freddie Mac is a done deal. While they both claim they don't need a cash infusion I suspect that once the discount window is opened to them they will both be there in line, money bags open. The new legislation also raises the max mortgage size these crippled twins can purchase to 625k or median price +15%. This will allow the banks to pass off more of their bad loans to Fannie and Freddie while putting the feds on the hook for bad mortgages rather than the stupid ass banks that sold them. This could be nothing but will more likely lead to the U.S. picking up most of the bill for the housing collapse while the banks get off easy. However tjhis goes we can be guaranteed that it will cost the public more than the nothing the two lenders claim they need.

SEC to the rescue!!!

I think the biggest joke is the new proposals to stop short selling against the financials! Why should we protect the financials who have been so involved in the destruction of other equities through their manipulations such as the naked short. If the SEC is to curtail short selling it has to be done industry wide or not at all. No one sector should have a mechanism to make money and destroy others unless they too face the same risk. This is just a poorly hidden way to remove the value from your commodity stocks and transfer that wealth to the frauds, cheats and idiots that run rampant in the financial sector. Screw them all and let the banks fail, the sooner we get this collapse over with the sooner we can get on with rebuilding a new monetary system hopefully built on real money.

On the Canadian front,

BoC held interest rates rather than cutting – Good

The U.S. collapse is going to cost us jobs regardless, there is no point devaluing to keep customers who might never pay you. A higher CND will allow us to miss some of the coming wave of inflation and maintain the value of our savings better, I think it is worth losing jobs that peak oil would kill anyway , to keep our currency strong !

0% down mortgages and 40 terms are no longer allowed – Good

Too damn late but at least the next wave of idiots won’t have the option of 0% down and a 40 year term. We have been lucky that this kind of mortgage has not penetrated that deep inot our market and now thankfully people can only be 5% down 35 years stupid .

I still think 35 years is too long ; people graduate, get a job and buy a house usually by late 20s putting them just years from retirement when a 35 year mortgage is paid, that and the years of extra interest will mean less retirement savings.

Job losses in manufacturing, especially automotive are rising weakly- bad/good

bad for the economy but good for the environment and long term oil supplies as people are actually driving less -3% so far, and sales of the biggest, thirstiest vehicles are falling like buffalo chased of a cliff. For those people who actually need a large truck for business there are some amazing deals as the resale on these energy hogs plummets.


The metals are heading down again on bogus strong dollar talk from the U.S. and I’d be buying if I had not just purchased a car recently, Buy if you can.

I’m extremely annoyed and there is absolutely no excuse for what is happening to some of the junior miners, its nothing but deliberate manipulation, sabotage or institutional desperation to raise cash , take Silver Corp (SVM-T) for example; healthy, expanding, profitable, low cost and it has lost over 55% of its value of late without a single bit of bad news to justify it. This is all taken place during an aggressive stock buyback which apparently is having no effect on the price. Today for example every few minutes anonymous sells 500 shares maintaining or lowering the price, sure silver is slipping but zinc is steady and lead is up recently so how the hell can this profitable unhedged company that produces silver at a negative price, lose 8% today.

Golden Tag (GOG-t) is down 10% today! , while still a speculation play they’ve earned the right to 50% of the ECU San Diego mine which is a proven 42 million ounces of silver and growing, Market cap today $11 million. See Bob Moriarty's write up on GOG
This share price does do justice to their 21 million ounce stake in the San Diego mine and especially not on the recent news from the Aquilon project where they hit 376 ounces/ton of gold on a very narrow surface vein. While this might never be a full sized mine if there is any decent length or dept to this vein a small artisan style mine would make a nice profit for them, hell they could buy back 1/3 of their stock with a 10 ton “bulk sample” WTF????
And why are they not doing this???

The stories go on and on and it makes no sense the prices for many of these juniors are lower than they were with $600 gold/ $12 silver (mind you some are crap and deserve a low share price but not many I follow don't deserve this fate). Is someone trying to destroy their viability and their ability to raise capital so the big boys can snap them up for pennies on the dollar? I don’t know what’s going on but this silliness makes you waver between selling the house and taking a 5 % stake in a company like GOG or selling all equities and running from the market. If I won the lottery tonight I’d make a bid for controlling stake tomorrow because deep down I know that fiat money is dying and real hard assests are the only choice, but man it's hard when you see the corruption and manipulaiton and you know your being screwed.

On the topic of manipulation Jim Sinclair apparently has about 60 juniors looking at the Chamber of Mines idea and hopefully we will get some action on outing the short sellers.

Well my paw is sore again so this is all the rant you’ll get from me today, I know I missed stuff but what can you do, I'll be back when I can

Thursday, July 03, 2008

Independence Day my ass!

A concerned Canadian’s view of his neighbour

American Independence Day is a wonder for us Canadians, who are for the most part a subdued people as long as you keep beer and hockey out of the equation. Each year we stare in wonder at the flag saluting, chest thumping and the use of catch worlds like freedom, independence, truth and justice. Many Canadians are bemused if not outwardly embarrassed by such an intense show of unbridled patriotism. I on the other hand feel pity for a people who have become paupers and debt slaves in what was once, but is no longer the richest and freest country in the world. Yet, somehow they still carry on about the Land of the Free and make over the top displays on Independence Day.

I honestly ask myself what all the fuss and posturing about?

Well they threw off British rule; that’s pretty impressive.

They helped destroy the Kaiser and Hitler; that’s pretty impressive despite the fact they like to take all the credit and showed up to both wars several wars years late.

They created a constitution that put the protection of people’s rights to the forefront of government responsibilities; which by any account is an outstanding achievement.

America built the most powerful industrial machine the world had ever seen, they made it to the moon and advanced all manner of technical innovation big and small; once again all things worth celebrating.

We must remember however that these events are the high points of the American experience and quite probably hollow victories when compared to today’s reality. Such patriotic holidays as Independence Day are now tools of the establishment who know that people will get lost in pointless pride when frustration and anger are more appropriate for today's circumstances!

The yoke of British Empire has been replaced by corporate and banking elites who are a much more sinister enemy than some pasty guy with a crown ever was. The U.S. created and destroyed 2 previous Central Banks but did not learn its lesson. These elite powers were persistent and with the creation of the current Federal Reserve Bank America finaly gave away its sovereign power to control its own money supply, No Independence here!

Thanks to the poisonous policies of the likes of FDR and Nixon the coin of the realm is no longer real money but rather a promise whose value is constantly waning. There is no real independence for people when they can no longer trust their currency. There is no freedom when that paper in your pocket, that stuff you need to thrive and survive can be debased and destroyed at the whim of others.

Where is your freedom and independence when your government decides that habeas corpus is irrelevant, that wire taps and reading your mail are essential, or that torture is acceptable behaviour? No longer is there much truth, justice or freedom in America

Freedom is an ideal that should be available to all, yet America feels it has the right to bully, invade and assassinate when foreign voters or leaders don’t do what they are expected too. No one hates America for its freedom; IF they hate America it's because America rations freedom to those deemed worthy, which these days is not even its own population.

Freedom is the right to protest right in your leaders face without being roped off and segragated miles away.

Freedom is a system that encourages more than the two political parties and gives you choices that are neither incompetent nor corrupt.

Freedom means it’s impossible for your name to mysteriously get removed from the voting list.

Freedom means it’s inconceivable that a machine could tabulate election results without verification.

Freedom is the right to say a war is wrong, my leaders are wrong, the system is wrong without being labelled an enemy.

Where is independence when the news media becomes shills and propagandists for the powers that be, rather than ask the tough questions and tell the truth?

How can you celebrate independence when each day billions of dollars are borrowed from Asia to cover the gluttony of your lives and the mismanagement of your government? Each day people owe more to the bank than before, each day less of America belongs to Americans, each day more freedoms are eroded. Hell, I'm mad about it and I don't even have a stake in your plight!

Independence Day should no longer be holiday for celebrating past glories.

Independence Day should be a day of national protest, pitchforks, torches and mass rallies with the intent regaining lost independence. Americans should shed the BBQs and the keg this July 4th and march on every legislature and courthouse in the land and demand their birthright back. Don’t celebrate lost freedoms, Grasp them anew.

I know I’m a foreigner and most of you are going to say STFU! But America needs an intervention and like the friend who occasionally takes your keys away from you when you’ve had too many, I had to tell you these truths as I see them.

Have a good weekend,

Wednesday, June 18, 2008

Investors wake up, It's time to fight back

There are some important things happening recently that we investors in the metals market need to be either aware or a part off. First of all many junior companies are being brutalized in the market from immoral and illegal market manipulation. Many companies with growing resources, growing cash flow and profits like a few of my favourites have unnatural and uncalled for short positions against them. Many miners are suffering from the illegal shorting of their stock by the very banks they have engaged to run their financing share offers. People who know these markets have example after example of naked shorting which is essentially fraud and counterfeiting of stocks. These practices dilute a company’s float and devalue the value of the stocks you hold, these people are stealing from you.

As I mentioned in the last post I implore you to listen to the last 4 weeks excerpts from the Financial Sense Newshour titled Crime of the Century, to learn about various aspects of identifying and fighting market manipulation.

Jim Sinclair of Jim Sinclair's MineSet is not only calling for a Chamber of Mines to coordinate information to find and crush the organizations who are illegally shorting mining companies but he’s also offering a $50,000 gold reward for anyone who supply “information leading to the identification of the managers or managers of the Hedge Fund pool operators illegally shorting junior gold shares.” Hell I wish I knew someone, I’d roll on them in an instant. If anyone out there has this information please do the right thing and speak up.

Since Mine Set does not break up it articles to individual pages I’ll just cut and paste his message, which I’m sure he wants spread any way he can.

Dear CIGAs,

I respectfully request that each member of the JSMineset community send this missive to the management of their precious and base metals junior investment company. Please follow up on it to be sure it has been reviewed.

Strength In Numbers

The junior producer and exploration and development companies need to consider the formation of a Chamber of Mines for this section of the industry.

This Chamber should be free of any individual company agenda, free of fees and other interferences with the singular intention of protecting our shareholders from being attacked by those in the shadowy part of finance.

There are close to 2000 companies in this part of the industry, many of which are experiencing the same extreme nuisances.
The naked gold short seller is an entity engaged in a criminal act with a goal of doing serious injury for the purpose of profit and is therefore a major target in terms of civil liability. The short and naked short pool operations are exactly the same but more apt to be a conspiracy to injure slightly then become subject to RICO statutes.

The job of this working Chamber of Mines as a singular unit is to pull these criminals out of the shadows into the light of day.
No matter how well they feel they are hidden there is always a paper trail going back to the perpetrator in this financial world.
Certain financial areas of secrecy in many cases do not protect the spoils of criminal activities. This may be proven soon at UBS where an officer is under arrest in the USA and is due to go to court shortly.

It does not mean anything that neither regulators nor exchanges care about the naked short or short selling pools, regardless of whether they are naked or not. If the stockholders and the company who’s values have been injured initiate civil proceedings, discovery will be full of legal opportunity. You cannot erase the paper trail that exists to every transaction.

My request is simple:
Contact the management of every junior precious metals producer, exploration and developer, asking them to contact Editor Dan at so that the Chamber can take form.

There is no hidden agenda, no money to be collected, and no desire to stroke egos and no desire for private corporate information. I do not wish to be anything but a member. Let the organization elect its officers so we can act as one. We can speak as one. We can win as one, but we are weak when scattered as the industry is now. Organize and we are a legion. Expose the perpetrators and then it is all over. The data is there. It can be organized and it can be dissected, yielding the evidence trail of those who wish to hurt, sometime simply because they are mean, sometimes for illicit profits.

Add to that that sociopaths mistreat their associates and employees by nature. No looking may be required. It might just happen to come over the transom, even though we do not invite that.
You stockholders must push your management hard. Personally there is nothing that I will NOT do in order to protect both my and my investors’ interests.

I herewith dedicate my life, my fortune and all that I am to the identification of the perpetrators and their conduits used. Those sociopaths that take joy by inflicting severe injury for profit by conspiracy and the use of dirty tricks must be the hunted of nearly 2000 company’s determined managements and their more than 500,000 very angry stockholders.

There is only one way to defend stockholders, which is through the organization and strategy of a major offensive. Forget attorneys at this point. Regulators are of no help. A Chamber of Mines acting together can prevail.

I will even if I must go it alone.
Together we are legion. Alone and looking the other way you are a victim. I have never been a victim. No one depending on me will be a victim.

There is NOTHING I will not do to protect those that depend on me. I am livid. Enough is enough.

We will add risk to the bad guys. That proposition you and they can depend on.
Your friend,
Jim Sinclair

If you belong to you might want to join the Group Junior Mining Investors Robbed by Canadian Investment Banks. The Group appears to be taking the manipulation problem on by contacting various junior miners with Jim Sinclair's message and his offer to coordinate the creation of a group to route out these bastards. While the first couple of day was passive floundering they now appear to have a concerted effort to build a list of companies they've contacted and those showing interest in the project.

I would also advise you once again to read some excellent work by Ted Butler, this time he shares his discovery that the Barclays Silver EFT does not have the amount of silver to justify all the legitimate shares they have sold in contravention of the ETF’s prospectus. Added to this short fall is naked short selling of shares not representing any physical silver. Today’s short position is 2.5 million ounces of silver but the all time high was nearly 10 million ounces in March.

Now the question is much silver is represented by these shares sold by the naked shorts?

Butler believes it represents 25 to 50 million cumulative ounces of silver shorted since April, this is silver people have paid for in full yet the ETF has no backing for. This shortfall if expressed in physical silver would be enough demand to make a hell of dent in COMEX inventories and in my opinion put fear in the industrial users and panic the price well above $50.
This is stolen demand that should have been reflected in the price.
Shorting on the Silver ETF is robbing all silver investors of our profits as do silver many certificates that are totally unbacked, it’s time to physical only because when these supply issues do become critical, paper silver with just be paper.

I’m an activist at heart so I’m glad to see such moves to inform investors and fight back, and you can help too. If you have long term positions in junior miners call your broker and demand your stock certificates now, this will assure you your shares are real or make your broker buy real shares to fulfill delivery. If you know healthy juniors who are heavily shorted, take a new position and demand your shares, when the pressure builds from this anti corruption movement there will be a lot of broker buying to cover phantom shares and you will make money.

If you have silver certificates demand delivery, if you don’t have that right of delivery look to buy physical silver and sell off the paper as you take delivery. We need must send the message, we will not be sold things that do not exist!; neither will we allow the market to rob us!

If you have any information or complaints call the appropriate authorities or claim the $50k in Gold reward. Demand bull boards remove suspicious bashers and make it clear to the press through letters to the editors that these issues are important. Write or call your elected officials and complain that securities laws are not being enforced and penalties for illegal trading are far too lax.

While common place to the juniors miners these illegal activities do take place in the rest of the market so spread the word to your non commodity investing friends.

On a side note, my prediction from November of $140 oil this year was short by 11 cents on Monday, Not that I like 1.35 a litre gas but I do like being right so 11 cents was annoyingly close. Oh well, hurricane season will vindicate me.

Friday, June 06, 2008

Canadian Silver Bug - this weeks stuff

Hidden Rot

One thing we have not seen much of so far is the mass of hidden paper held by non bank organizations like pension funds and Insurance companies. While some pension funds have reported lower earnings or in some cases real loses, few have actually fessed up and told the public how much exposure they have to CDOs. A friend who works for a major Canadian Insurance company tells me there is a large sum of CDOs on the ledger books which are still marked at book value not marked to market. Don't allow the lack of bad news convince you your insurance company or pension is secure especially with the news that MBIA and AMBAC have had their credit rating slashed from AAA down two levels to AA by Standard and Poor's, both companies are also on Credit watch from Moody's and could suffer further downgrades. Such downgrades change the rating on all the bonds these companies insured which represents around a Trillion U.S. dollars.

While I'm not sure of the mechanics or time frames to liquidate positions, I do know that pension funds cannot legally hold onto bonds that lose investment grade rating and should credit ratings continue to slip the market could be flooded with 10s or 100s of billions in mortgage backed paper. If such a glut of bonds hit the market there will not be nearly enough suckers willing to buy them, at least not anywhere near their book value. Once prices fall enough vultures will enter the market to snatch some of these up at a substantial discount in hope it they can be sold at a profit later. The result of this forced selling will gut pension funds and if like most people, you probably don't have an option of cashing out without losing money up front and/or without paying a huge tax bill to get at your cash.

While you may not have the means to buy a lot of metals for pure speculation both the U.S and Canada have ways to hold some form of metals in retirement accounts , see if you can find some way to divert a portion of your retirement funds in that direction as insurance against the threat of exploding pension funds.

General stuff

The economy is slowing in Europe, the U.S. and in Canada we actually announced a GDP contraction for the last reported month. I don't think this means we're in worse conditions than other countries I just believe our numbers a little more upfront and honest than the Bogus U.S. stats. Here in Ontario we've had a series of reported job cuts by automakers which is a very important segment of our economy but I can't get too worked up about it. I believe that between the coming financial crisis, oil prices and eventual fuel shortages the end of the car culture is in sight, and bail outs and bribes to GM to save jobs is just wasted money.

These most recent GM cuts are at plants that makes trucks and SUVs, but what would you expect? GM has been so intent on flogging these high end, high margin, gas hogs that they've neglected to keep up with Japan or Korea in making reasonably sized, efficient, good quality cars. How these north American automaker can continue to be so far behind the curve in reading the market for Gas prices and public demand is beyond me. Their vehicles are sized wrong, over powered, poorer quality and behind the Japanese in hybrid technology.

I have no doubt that the current recession will soon lead to GMs Bankruptcy so they can beat down the unions and shed their responsibility for a hugely under funded pension program. See how this meshes with my first warning, GM's pension is already massively under funded and what do you want to bet that the assets they do hold include a whack of these soon to be junk rated CDOs?
When you devalue the pension fund by 30-50% to cover bad investments what's left will be pitifully insufficient.

Don't expect a housing market rebound to save the CDO market, the value of the these bonds have no hope of recovering as housing prices continue to slump. There is no point in me showing you more stats when this sale that just ended in the San Diego area says it all; buy one 1.6 Million dollar home and get a second one worth $400,000 free.

Other builders have been offering mega upgrades to sell homes , lower prices, offers of a new car in the driveway and maybe some of those urban myths about agents who will do "anything" for a sale are finally coming true.

Many home builders are really hurting such as Oregon's Legend Homes which has failed to pay subcontractors after getting its main credit source cut off. Legend is playing down bankruptcy talk and has hired a restructuring expert.

Banks for the most part are still hemorrhaging but even then you can't trust their numbers as accounting loopholes are still allowing them to lie about the real damage to their books.

Lehman Brothers is facing an especially large problem as it finds itself being heavily shorted as investors either believe it's destined to crash or are encouraging it to do so. This heavy shorting follows the pattern that started the run on Bear Stearns and might be an attempt drive it into the hands of some other bank to consolidate the industry and the risk.

Money, crap and the real kind.

In the last couple of weeks the U.S. dollar has been irrationally strong but I'm not going to waste a lot of time explaining yet again why it's irrelevant to the long term trend of dollar meltdown. The last 24 hours has erased a weeks worth of hard fought dollar gains quite easily. Exuberance is one thing but when the job numbers are bad even after Government lying you know there is a problem.

Gold and silver have been bouncing around but I think they are just being played in a range while they consolidate. There have been some weird moves like the one Thursday where gold was down by a faction but silver was up by 2%. Today it looks like the dollar slap down will allow both Silver and Gold to make a strong week ending statement and hopefully signal an new up trend.

For those of you still trying to find Silver bullion

As of Wed the main Scotia Branch in Toronto, Bay and Adelaide does has some bullion but only in 100oz bars. I wanted to pick up a few small pieces but since I'm car shopping a 100oz purchase would not have been prudent. The Coin store in the arcade at Younge and Temperance has 100oz bars too, but nothing else.


I've not mentioned my stock holdings for some time as little was happening, but in the last month I sold my position in Quinto at about 300% profit because I was very disappointed that a low ball, all share takeout by Thompson Consolidated mines was accepted by Quinto's board. This company was worth more than this offer for just the iron ore resources and the takeover gave absolutely nothing for the graphite and titanium prospects which each could have been company makers. While there may be a secondary offer I'm not very hopeful so I sold Quinto and moved it into Minefinders and Silver Wheaton.

In the last two years with Quinto and Lionore, I've actually done better with base metals than the small Gold and Silver stocks which are suffering a lot of shorting in the market. This constant shorting on companies that are in production or on the verge is insane. The spring keeps getting wound tighter on this market as good juniors get undervalued even when they are showing profits and/or increasing resources. The value on some of these companies are just stupid cheap and represent a huge opportunity should the next leg up crush the shorts as I expect/hope.

I would recommend that anyone who is frustrated by the poor prices of juniors check out the discussions on the Financial Sense News hour the last couple of weeks on stock fraud, manipulation and illegal trading. It's definitely worth listening to and if you make complaints about such activity we might finally get regulators to deal with such obviously illegal activities.

It's finally hot where I live, so I'm gonna go look for a patio and a cold one, have a good weekend