Possible Canadian Class Action on silver Manipulation

Not a sure thing yet but worth watching for if you think you'll qualify and want a part of this case

Class Action against silver manipulation ???




Not that we haven't noticed this for years

Silver Manipulation casually acknowledged on CNBC

For years now we've all heard about, and largely believed, the claims of manipulation in the silver market but little has been done to highlight or address the issue.  Main stream media for the most part has ignored the claims of manipulation while regulators did their best to hide and obfuscate the truth in order to protect a futures market that would collapse if properly investigated.   With that in mind it was quite surprising to see 2 CNBC hosts causally acknowledge that manipulation was real, sadly they didn't dwell on the subject but surely such an admission must be seen as a door opening to the truth. 

How much longer can such a corrupt market continue to run amok once the media openly slags its credibility?

I don't know if this was a slip, a warning that they are starting to take their jobs seriously or a dejected admission in the futility of trusting the markets, either way lets hope it stirs up some wider interest.

Start viewing  at about 9:20

H/T to Silver Doctors for catching this

$20 for $20 Pretty coin with no $ Risk

I'm not a big fan of collectible and commemorative coins because they have a low weight and a high price compared to the value of their metal. Occasionally however I see something like the Royal Canadian Mint's $20 for $20 silver coins that are worth buying just because.

The thing about these limited edition coins (3 per address) is you can buy them for their face value of only $20. I realize this is just a gimmick to get new customers interested in collectible coins and you're only getting 7.96 grams of silver for $20 but it's pretty and has a risk free cash value.

At only 3 coins each its not an investment opportunity but they'd be great gift/ice breaker to begin a conversation on why people should invest in silver.

Just a thought , have a nice weekend.


P.S.

If you use the promo code Mint 2 shipping is free, at least in Canada.

2012 Predictions, Guesses and Stuff

I have to say I’m really quite surprised at the resiliency in the system, or rather the lengths that the Powers that Be will go to in order to wall paper over the non-repairable cracks in the system. In truth nothing has changed over the last couple years, government and personal debt is higher, the production of phantom money continues, housing has not been allowed to discover its real bottom due to the lengthy foreclosure waits, the lack of clarity on title fraud and the huge inventory of houses on the market and hidden by banks. So while things have not unraveled as quickly as I believe they should I have seen nothing that says the problems are solved


Gold

The Euro is risky because of government debt, the spectre of QE and the huge possibility that it could soon be a splintered into several or many new currency.

The Dollar is hugely overvalued vs its risk. You have insane debt levels, nearly free Fed money, default risk on State and Municipal paper and the ever present danger someone with large Treasury holdings will put spite and vengeance ahead of self interest and torpedo the dollar. Personally I believe putting the dollar down may as well happen now as later.

Gold/Silver is the only real alternative to a dangerous currency market and with the exception of trapped money in RRSPs I’m nearly all bullion/cash. Being Canadian I have a little faith in our currency right now but were I American I’d be 100% bullion. What RRSP money I can’t move is largely into mining shares and energy

It’s my belief that we already seen the 2012 low for metals and I believe a conservative prediction for gold is $2100. Being an U.S. election year I don’t think panic mode will kick in this year, 2013 however will be madness.


Silver

I expect big things for silver this year at $70+ in large part do to the pressure of existing physical investment demand as seen in record sales for American Silver Eagles and Canadian Maples, both of which appear to have surpassed the domestic production of Silver. While neither country’s are top tier producers they are both industrialized countries that consume a great deal of silver all of which must now be imported.

Silver also has Eric Sprott to contend with and between his open letter to silver producers to abandoned cash savings for storing company value in physical silver and his 1.5 billion dollar prospectus to add 40-50 million ounces of silver to his fund, Sprott is going out of his way to squeeze the market. Savvy investors will jump at the chance to buy a better managed and fully accounted fund and drop the much maligned SLV trust. The current premium on the Sprott fund shows that a goodly part of the market sees SLV as a scam.

I’m particularly pleased to see some miners are fighting back, I hope that more companies hold onto their product until the price reflects a fairer value

While I’m stating $70 as my prediction for 2012 I would not be surprised to see Silver test $100 before some panicked manipulation slaps it back towards my goal.

Oil

We still have tensions in Nigeria, Iran, and Iraq so disruptions are quite possible, also Mexico is still on track to become a net importer instead of a net exporter (should have been last year but I don’t have the stats). Yes more heavy oil plays are being developed but nowhere near as fast as the better quality oil fields are depleted. I don’t see us going below $85 this year and we should see peaks north of $130.

U.S. issues


Food stamps and poverty

While the numbers don’t always show us the truth about inflation everyone who’s been grocery shopping the last year or two has noticed that prices are increasing and pre-packaged foods have shrunk in volume or weight. Examples are easy to see, lighter loafs of bread, smaller jars of coffee, butter tarts and cupcakes now come in 10 packs instead of dozens. Food, energy and a weakening U.S. dollar should raise U.S Inflation to at least 4% reported and closer to 8% real.

Despite the slight decrease in food stamp recipients in Dec I still expect that the 46.3 million currently on subsidies will grow to 49 million by the end of 2012. Don’t however expect the $ value of food stamps to rise to offset food inflation. [ Please people if you have any gardening skill and charity in you at all either start gardening and donating foot to people who need it or adopt a family in need and teach them to grow their own. Poverty and hunger hurts young kids the most delaying their metal development and reducing their chances of succeeding at school. Unless you want even more poorly educated underachieving citizens don’t let kids go hungry. ]

It is my belief that government unemployment numbers like U6 are still not broad enough to capture all those wanting work. It’s damn hard to make a prediction when you can’t trust the measure you’re guessing against, that said I suspect the U6 will stay in the 15% range while the Shadow stats SGS Alternative measure will hit about 24%

Housing

Being an election year I don’t expect anyone will have the balls to propose a law retroactively legitimizing all those questionable mortgage documents and titles. I do however expect such a law to be slammed though shortly after the election regardless of who’s wins because lets face it, the banks are in charge! While it would be suicide to legalize hundreds of thousands extra foreclosures during the election cycle it would quickly become business as usual after the vote when favours are called in for all those big gooey campaign contributions.

This means foreclosures will continue to drag out in the courts and banks will continue to hemorrhage as additional people decide not to pay their mortgage, even when they can afford to. While clearly unethical who wants to pay $300k for a house valued at $200k? With their equity all eaten away people may as well stop paying and squat for 2-3 years while they build up a nest egg or pay off other debt especially student debt which can’t be ditched in bankruptcy. Many will eventually walk away from their homes with enough money stashed to start over again.

For 2012 housing will continue to teeter in the worst of the bubble markets but may strengthen slightly in other areas. This is not because of overall economic health but opportunity buying in depressed regions like Florida by a new wave of speculators. There is also significant pent up demand from Canadians looking for vacation properties down south.


Bank Failures

While the pace of bank failures has fallen off from previous years there were still 92 FDIC insured bank failures in 2011. Banks are under conflicting pressures as they can’t quickly or cheaply foreclose on defaulted homes, when they do foreclose they may be leery of selling that home and watering down the market further, if they do sell they must admit the loss. If they sit on the house until the market improves they risk squatters and people stealing copper pipes and fixtures which often creates far more damage than the thieves recover and the banks can tolerate.

Really it looks like a no win for banks unless a sudden turn around raises home prices by 10-20% while employment rates soar. It’s not going to happen and another 100 banks should fail this year.


State and Municipal failures

There is no doubt in my mind that the trickle of municipalities filing or attempting to file for bankruptcy will both continue and turn into a raging torrent in 2012. There is also reason to believe certain U.S. states could default this year, key among those are Illinois, Jersey, Michigan, Nevada, New York, and California. This will mean hair cuts for investors and creditors, destruction of medical coverage, jobs and pension plans which will send these states into serious regional recession. The credit agencies will probably panic and lower other State credit ratings which will increase the chance of more defaults. Few if any states can maintain their debt and continue to honour all their existing obligations unless the economy turns around and as I’ve said before, it won’t.


Canada

With our high rolling commodity based currency inflation in Canada will rest almost entirely on the cost of energy, if Oil and gas stay in range this year inflation will stay modest under 3%,

Employment will trend up from its current 7.5% largely on austerity measures by the federal government destined to kill 50-60,000 jobs. This will be devastating to Ontario in a general way but will absolutely decimate employment in Ottawa. These job loses will weaken consumer confidence and retail and service jobs in the Ottawa area perhaps doubling the job losses.

Canada’s current government refuses to see the dangers of Dutch Disease as higher commodity prices drive the Looney and kills manufacturing. Rather than hoard vital resources for the long hall Canada’s all out race to produce everything for immediate export will ensure poorer quality jobs for the majority. Eventually it will also mean Canada won’t have saved any of our resources to ensure Canadians have those things we need. 40 years of exports vs 200 years of domestic consumption, which will be better for Canadians in the long run, especially once peak oil hits?

Canadian housing is far from affordable and cannot maintain these prices indefinitely, despite tight supply something has to give soon. I think and hope we will see price stagnation for the first ½ of the year followed by a slow and orderly price decline in the second. We don’t need a U.S. crash but we do need price moderation to ensure affordability. With the government austerity Ottawa will probably be the first market to slump.

Other risks

Greece, Spain, Italy, Hungary, Ukraine - Unless the monetize everything and destroy the Euro a default will happen and probably this year.

EU solidarity- IMO Greece is as good as gone, it’s just a shame I can’t short the new Drachma now. If one goes the precedent will allow it to unravel.

Chinese Banks- a soon to pop housing boom and many factories operating at or below break even means bad loans will abound.

Climate change. -

It’s late January in Toronto and I’m worrying about where my umbrella is rather than the need to shovel so I can’t help but believe the real consequence of climate change are finally being seen. So far this winter we’ve had no snow to build up the water table and fill the lakes, there have been winter grass fires in the prairies, no ice fishing, no skiing, and no severe weather to kill off agricultural pests.
I know the metals community is rife with those who don’t believe in this issue but where I sit this region is changing and changing quickly, hell last year I saw my first possum in Canada, which just isn’t right. You may argue we didn’t cause it but I don’t believe anyone can honestly claim something isn’t happening. Who caused it is irrelevant but there will be financial consequences like the destroyed forests of BC, the droughts and fires in Texas, Floods in Australia and the recently unpredictable monsoons in the Indian Ocean. Climate change is a wild card that’s going to hurt someone this year, we just don’t know who and there’s SFA we can do about it.

Quickie 2011 prediction recap

I’m behind in my work, my life and next years prediction so I’ll quickly gloss over my failure and hype my success(s) from last years predictions

Gold

I called for a high of $1800+ and floor of $1300, I have to say I’m pretty freaking close on this one, I made my minimum high and beat it by $100.30 and my kept above my low by $14.90

Silver

I was disappointed by silver this year missing my estimated high of $50 by a mere $1.30. The bigger surprise was how the corrections held and eliminated the entire gain for the year. Silver still has a strong story but far too many dealers and investors are hanging on to the belief that paper silver which is over leveraged and in all likely hood undeliverable for all but 1-2% of the contracts issued is the same as owning bullion.

Oil

I expected that false tales of growth, enthusiasm or shortages to pop oil to $120 early in the year and I was wrong. We did hit $120 late in the year with Brent but it has not held long enough to cause a recession, of course its kind of irrelevant because European austerity measures in response to their debt issues will eventually drag the world economy towards stagnation.

Housing

U.S house price declines continued in some regions but there has still been no fix for the electronic registry issues, no way to fast track foreclosure and no way for banks to clear inventory without taking huge loses and causing bank failures. All this adds up to an issue that can’t yet be settled, the rot continues. I was expecting an unconstitutional law to retroactively legalize the electron registry issues and enable quick seizures; this didn’t happen and with an election in 2012 cannot happen until 2013.

Unemployment and poverty

Food stamp use continue to grow as predicted to a whopping 46.3 million or 15% of the population but did not hit my expected 48 million goal.

U6 unemployment has dropped to near 15% which is way off my 19%, I don’t believe the government numbers but my prediction is way off as I can’t prove otherwise. I will note that John Williams alternative unemployment measure which used to mirror gov stats )just many points higher) deviated up from the government trend. Someone is wrong!

Canadian content

While cracks are appearing things have not deteriorated as quickly as I expected in Canada, Inflation was moderate at just below 3% largely because my expected peak in energy was late in the year and largely unaccounted for yet.

Housing is holding fast due to a lack of a U.S. style glut of homes and rampant speculation, but how long can this shortage prop up a clearly unaffordable market in Toronto and BC?

Unemployment is 7.5% trending up

I would say my Canadian expectations are about 6-8 months ahead of reality, the economy is slowing and Conservative austerity in all things not war related will begin to bite the job market hard soon.

As in most years I think my sense of the trend is accurate but my timing sucks.

I'll have my 2012 predictions out by early next week,, I promises not to look at the papers until then ;)

Silver at $30, Am I buying?

It looks pretty obvious that after two crashes $30ish is the new floor for silver and as such it is an excellent time to buy. Unfortunately for Canadians our dollar has taken a shit kicking over the last couple weeks so today’s silver sale is a little less sweet than it should be. (With a lower price and a higher currency Americans should definitely be jumping back in with both feet.)

What I can’t understand is the flood of money from the Euro to the U.S. dollar. That’s really akin to changing your cruise booking from the Titanic to the Lusitania, either way you’ll end up taking a bath. Regardless of reality, the trend toward the U.S. dollar and weakening commodities will continue to hurt the Loonie until such time as something major and disastrous hits the U.S. market, BOA failing perhaps? All we can do for now is ride it out.

So in answer to an email that asked if I'm buying? Hell yes!

But what to buy?

At the beginning of my silver investing I was overly concerned about the premiums on small bars and ended up with two many large bars, mostly 100s added to the junk I had already collected. While logical in that I was getting the most for my money I believed and still believe that fiat currency is destined to be destroyed and that silver and gold would once again be circulated as real money, in that situation the big bars I have aren’t very practical. Face it, when silver goes up to $200 dollars an ounce it’s going to damn hard to break a 100 ounce bar at Tim Horton’s or barter at the farmers market with a Kilo of silver.

With this in mind I’ve been focusing my purchases on smaller and infinitely more practical 5 and 10 oz bars as well as many 1 oz rounds which were generally the smallest sized silver you could find. Recently however a wide range of smaller sized pieces have been coming to market including ½ ounce rounds, 5g, 10g, ¼ oz and ½ oz bars from NorthWest Territorial Mint, both in their own brand and for Pan-American Silver. At this time the premiums on these tiny bars are quite high making an ounce of silver in ¼ oz bar form just shy of $48 us, or the ½ bars $36.66/ounce vs a full ounce round at $34.33. For Canadians there is also the issue of cross boarding shipping combined with the possibility of wrongly assigned duty because people don’t know their jobs. Curious if anyone else had new products I also checked out first Majestic Silver who now have their own ½ round (also from NWT Mint) at $35/ounce. Available in a previously hard to find size, under a 5 dollar premium, in country and quite pretty too, This is what I’m buying!



Added Oct 11

Ok I have recieved my 1/2 oz rounds last week and they are nice enough that I've reordered the maximum 10 rolls, plus some more 1oz rounds. I wish First Majestic Silver had an associate plan of some sort, I'd proudly sell these.

So we’ve had a correction, so what! There are bigger stories.

While I only posted it on Facebook (I was too busy working an election campaign to blog) I mentioned a number of weeks ago that we had gone too far too fast and I suggested selling silver equities between $45-50 silver and waiting for what seemed a guaranteed and much needed correction. It turns out I was correct in theory but was once again too busy to fully execute my devilishly cleaver (dumb luck) plan. I started to get antsy about $47 and pulled the trigger on my silver Wheaton, Arian, and a couple others but I didn’t get around to selling everything. Still it was a decent call and while fearful of catching the falling knife I re-entered the market and rebalanced my portfolio on the way up at about $35. I’m relatively confident we’ve seen the worst moves the year and it’s mostly up from here but this correction may not be the most important story of the year. I believe the bigger but largely ignored story is the state of the COMEX stockpiles which highlights two important trends


Total silver

While the total amount of silver in warehouses fluctuates as you’d expect, the total of silver on hand continues to trend lower. I believe total silver stocks will break below the 100 million ounce mark this year, a move which should be a major psychological milestone bringing much more ignorant chatter about industrial shortages to market.

Deliverable silver

The other trend has been the shift in delivery status of COMEX silver to a point where only about 30% of their stocks are in the registered category, the category that’s available to fulfill contracts. This is a strong signal that the owners of silver are either not interested in selling their silver at today’s price or perhaps not interested in delivery at any price. This reduction in deliverable silver will eventually be a big story, one which relevant or not will push the next wave well past $50 oz.


Reality vs….

Of course any talk of absolute shortages at this point would be total gibberish as smart silver users would have looked into direct mine/smelter purchases or created a large enough SLV position to demand delivery from London some time ago. As long as SVL is actually backed by bullion(?) and the rules allow large baskets to be delivered there will be no real shortage. This situation could however create additional hurdles for manufactures in both costs and complexity. Any COMEX shortage story will not necessarily indicate a real shortage but could in time turn into a self perpetuating prophecy as large players and greedy speculators (us?) start hoarding.

All said it could get nauseatingly volatile in the next year or so if you must speculate do so in cash and only in equities, hold on to your physical silver so tight your fingers bleed.

There will be a time to sell physical silver but not below triple digits or a Mad Max scenario.

10 Beautiful Silver Products

I thought I’d do something different for a change and discuss what I think are the most beautiful silver products. After all it might be many years until we hit our personal target prices so why not have an investment product whose beauty we can appreciated while we wait. This also gives us all a chance to see a few things not in our own collections. I encourage you to comment with links of beautiful things I’ve missed.

I’m not going to put these 10 items in any particular order as that just leads to petty arguments.


Scottsdale Silver’s Stacker-

I think this is a relatively new product and I can’t tell you how much I love the bevelled shape and utility of these uniform stacking silver bars. These are available in both a 10 and 100 oz bar and I’d love to add either size to my collection. I do wonder however if there is any wear or abrasion between the bars when you stack them, or do they have an adequately loose fit.

First Majestic Silver- 1 Kilo

You might not want an entire collection of these matt finished bars but as a contrast to all the high gloss products you already own I would highly recommend this product with its subdued sandblasted finish. The quality of First Majestic products is excellent but this is the only piece they make that stands out in terms of design and looks. I own many of their rounds and a few small bars but I’m not that in love with their design, this bar is the exception.


Wall Street Mint-

I can’t say that I add any extra sentimental value to this product due to the Twin Towers on the New York sky line but this is still a pretty bar. They came in 10 and 100 oz bars.


Mexican Libertad

Americans have far more exposure to the Mexican mint products than we do here in Canada and that’s a shame. The Mexican mint has quality products and absolutely stunning designs such as the Silver Libertad shown here. I’m sure it varies by year and demand but they have been released in 1, 2 and 5 ounce sizes as well as normal finish and proof.

As you can see here there is also an older design Libertad and while not anywhere near as attractive it’s certainly worth having both to compare.


Silver Canadian Maple

The Maple is a high quality coin with a simple bold image that is not lost in the clutter like many other coins or rounds. Production began in 1998 and coin has the distinction of a higher face value ($5 Canadian) and higher purity than many of its contemporaries 99.99%. There have been 3 different images of the Queen during its years of productions, small runs with special privy marks and 1 year where a 10oz version was sold to commemorate 10 years of production. sadly I missed one of these 10 oz coins on an eBay auction a couple of years ago failing at the time to realize how rare they were.



Australian Kookaburras

This is a nice series of coins with different Kookaburra images each year available in 1oz, 10oz and 1 kilo sizes. Some years images are better than others, premiums on this side of the ocean are high but it’s still a great addition if you want to enjoy the beauty of your investment

Silver Britannias

Some years I really like the images on these coins, other years not so much. I do however like coins that change it up and give you new images even if they can’t get it right every year.


Sunshine Mint

These bars have a good bulky look and a nice design that contrast the detailed coin like area with the brilliantly shiny back ground

Pan American bars/rounds

I really like the simplicity of design and the fetching contrast between the matt and shiny finish. It’s interesting to note that Northwest Territorial Mint makes these lovely Pan-Am products yet their own NWT branded bars/rounds are not attractive at all. In the end manufacturing quality does not matter if the design sucks.

Eagle/Peace Dollar

I’m not adding the American Silver Eagle and I know readers will shit all over me, too bad! I know it’s very popular and many people talk of its beauty but I just don’t like the design. I find the Eagle cluttered around Liberty’s head because of the flag and the bundle of crap over her left shoulder and to my eye they never look struck quite deep enough to give adequate contrast unless you get the proof coins. The proof works the normal coin does not. I also begrudge praise to a high end coin that wimps out by only using 99.9% silver.

Now a Peace Dollar with a nice patina is a beautiful coin suitable to be on the list, to bad you have to pay such a premium to buy one. Perhaps they should revamp the Eagle with this old image. The bird side of the Eagle is quite nice, just replace the cluttered Liberty



Beauty is in the eye of the silver-holder

When it comes down to it, sometimes it’s not the perfection of design that makes a particular product your favorite. While I see the beauty in all these products some of my favorite hunks of silver are odd shaped hand poured ones or the rare 10 oz Bache bar I picked up on EBay very early in my silver fixation. The Bache bar was uncommon, somewhat different in shape and was a piece of the Hunt Brothers story making it a favorite even if its not as shiny and pretty. I’ve never taken a good picture of my Bache bar but I found this little thumbnail online.

Canadian Silver Bug 2011 Predictions

Looking ahead into 2011 I see no reason to question the trend I’ve been following for the last several years. In previous years my predictions have not been so much wrongly inspired but wrongly timed and much of what I still see coming are either leftovers from last year’s post or my longer 5 year prediction (now 4 years).

Gold

Overall I expect continued strength in gold as the recent trend of massive buying on dips creates an ever rising floor which resists being pushed below. This stubborn resistance stopped a couple of late year attempts at running the price down and is a good sign that gold will not be going below 1300 again. On the up side I’m calling for $1800 regardless of the currency markets, if however the U.S dollar index collapses below 70.0, $3000 gold is possible. Of course the US dollar index itself is corrupt and becoming quite irrelevant when so many of the worlds major currencies are playing the same games of monetization, gold itself is perhaps the only valid measure of currencies left.

Silver

$50 silver seems like a big leap for 2011 but one I’m willing to make, demand remains strong, supply cannot be greatly increased and there is so much existing demand wrapped up in defective, badly managed, unbacked and entirely fraudulent paper products masquerading as real silver that anything including a default somewhere is possible. We don’t even need to convince the public to buy a couple hundred million ounces to bust open the Comex or the LME all we have to do is build enough doubt into those poor saps who’ve bought paper silver that 1% of them demand delivery. That’s all it would take to bust this wide open and make Silver the investment of the century.
Silver will continue to outperform gold and the silver to gold ratio should fall below 40 next year

I expect the Comex stockpiles to drop below 100 million ounces early in the year and continue down, whether we can reach the industrial panic level this year (or what that level is) I don't know but I can't see manufacturers sitting on their hands when levels drop below 90 mill.

Oil

Peak oil is very near and even the U.S. military states in the most recent Joint Operating Environment report “ By 2012, surplus oil production capacity could entirely disappear, and as early as 2015 , the shortfall in output could reach nearly 10MBD (million Barrels a day)” So while this is not necessarily the crunch year I believe we will see $120 in the first half of 2011 but it may correct sharply if the price is high enough to prompt another “acknowledged” recession, me I’m not convinced the old one is over yet!

I see more regional/seasonal fuel shortages in Canada because of reduced refinery capacity

Housing
I can’t know how the U.S. system will deal with the fraudulent paper trail surrounding millions of residential mortgages but I can guess they will pass a new law retroactively patching over the mistakes made.(Constitutional or Not)

This law will undoubtedly favour the very banks that committed fraud, failed to maintain the correct documentation, and bet against their own customers and will instead punish the average Joe. That said, I don’t pity the dumb ass who bought an overpriced house with no money down, no prospect of actually paying it off, just so they could partake in the American dream. The American dream, western superiority, and consumer gluttony are now all symbols of a failed experiment in greed. Yes you can curse about the banks being predatory but if you are too $@$% stupid to read the fine print, factor in risk, model scenarios on increased interest rates etc, and only buy what you need rather than what you want, TOO BAD. You are not a victim but a contributor to the problem.

The banks however will not gain much from this new law; Yes they can continue on their merry way foreclosing on 20% of the nations mortgages but they cannot sell these properties for what’s owed on them, neither can they afford to buy back the 100s of billions in compromised mortgage bonds they sold as Investment grade. Add in the increasing failures in commercial mortgages and banks will continue to bleed out causing 270+ banks to fail in 2010

I still question the rationality of kicking people out of houses and leaving them unmaintained when banks could open up a rental division and generate some cash flow on them. It obvious they can’t flood the market with all those empty houses or the market will tank another 20% or more so why not keep people in them, generate cash flow, and keep them maintained? The entire industry is run by dumb assess.

It’s probably happening in some areas already but I suspect that on a national scale resale houses will soon sell considerably below construction costs. At those prices, the stigma of foreclosed resale properties vs. new homes will lessen and new house starts will continue to fall.

Unemployment and poverty
U.S. Broad based unemployment will continue to rise on more real job losses, more graduates unable to find work, and more pensioners attempting to return to the job market. Look to the U6 number to come in about 19%

Inflation is being felt in areas like food, energy, insurance/medical costs; it’s also being seen strongly in the commodity and wholesale prices which will manifest themselves at the retail level by mid year in a way which government stats will not be able to hide.

As we speak about 43 million Americans or 13% are on food stamps, I call for 48 million by year end with no increase in their dollar value. Poverty will not only spread but deepen.

More and more tent city/shanty towns are popping up on the fringes of U.S. cities, Crime, unrest and violence will increase often in depressed jurisdictions that have already been forced to lay off law officers. While I doubt societal breakdown is pending this year, lawlessness will increase will increase with poverty, many areas will not have the resources to cope.

Debt
I said the same thing last year but I still expect scores of towns and cities to declare bankruptcy (if allowed to in their States) or simply default on either they debt repayments or pensions. While not able to go bankrupt a few States may also default debt or obligations.

QE3 is a possibility but regardless the U.S. debt will spiral further out of control, what’s a few more $ trillion when it’s now impossible to balance the U.S. budget. The U.S budget deficit is now larger than ALL federal government discretionary expenditures and without massive real growth or cuts to pensions, Medicare, and other government obligatory payments the U.S. Gov can never balance its books.

If QE3 happens it will be rationalize as a way to bail out the lower levels of government

Added Jan 2,
I think we will see student debt defaults spike this year, enrollment dropping and more existing students not finishing due to inability to pay tuition or get new loans. I also think we will see a a couple of for profit universities go bust.

Canadian Content

I believe 2011 to be the year when the shit begins to hit the fan for Canadians who’ve smugly spend the last 2 years claiming moral superiority over our neighbours to the south. Things will start to unravel in Canada but the results will not be quite the same as America’s for a number of reasons

1. While Canadian personal debt is way too high our government debt to GDP is still modest in comparison

2. There is still healthy demand for Canadian debt without monetization.

3. While undoubtedly underfunded our Government pension fund actually has more than IOUs in it. Is it enough to be self funding? Hell no! But it is both substantial and salvageable if we start clawing back more from those that really don’t need it and disallowing early retirement or even push up the age from 65 to 68 or 70. Working is good for the body and soul; inactivity costs governments both in pension and in medical expenses.

4. There is no glut of residential housing or residential rental


We will however begin to see a growing trend to inflation; 5-6%, mainly because of the energy and food components which might run as high as 25%

We will see the housing market slump (but not as much as in the U.S.) prices will come down 5-8% continuing the trend into 2012.
Housing starts will slow.

With lower prices pent up demand will allow many people to enter the market and grab bargains, there will be no ghost town developments.

Unemployment will rise from 7.6% to above 8% maybe so much as 8.3%

International Considerations

I still believe the EU is in major danger. Recent riots in Greece will be echoed in other Mediterranean States and Germans will become mighty pissed off at the expectation they will bail out every failed state in the EU. I still expect EU members to be leaving of their own free will or being tossed out by the majority as part of my 5 year prediction with Ireland, Spain, Portugal, Greece and even Italy as prime choices to be shown the door. I also believe EU expansion is over; the Baltic States will not qualify to join and would be better off not doing so regardless. The abysmal condition of the Med States and its impact on the Euro is the only reason the US dollar has not broken down they way it should

The BIG story in 2010 should be Spain which unlike Ireland and Greece is far too big to fail but at the same time is far too screwed up save. German banks are on the ropes and Spain could well bring them down unless a huge monetization of debt takes place EU wide. This is why it’s possible for gold and silver to soar without any perceived U.S. dollar weakness.

China, Russia, Brazil and a few others will make more deals in their own currency, cutting out the need to use Dollars or Euros.

China is suffering high food inflation, a housing boom and reckless lending practices; I suspect we will see some internal turmoil but the crash they are facing will not be this year


Last words

Overall the trend continues to point towards hard times. While gold and silver are great investments, debt reduction, food security, and taking care of each other should not be ignored. Good luck all!

2010 prediction review

I’m a little surprised this year by metals market, not because they performed different than my predictions, I was spot on with gold hitting $1400 and silver clearing $25+. What I was surprised about was the fact that these two did so when without much greater weakness in the dollar index. This says one or two things to me

1. Every nation is in a cycle of competitive monetization making gold and silver appreciate far more than the dollar index would otherwise indicate. (we are all screwed)
2. That there is one hell of more potential in metals than even I believed.

Face it, I’m not one of those writers predicting $20k gold, my modest 5 year prediction (oct 09) is for $3000 and $120 silver but if we can make these kinds of gains this year with the U.S. dollar index still above 80, what the hell happens when it actually breaks down?
My “all hell breaks loose” scenario begins to be more realistic and that scares me. Personally I would prefer austerity, deflation and an eventual steady state economy, to inflation, out of controlled growth, and the world turning into a desolate Easter island scene.

I think the pressure on the comex is growing and it was good to see some aggressive withdrawals in Nov/Dec, while its bounced back a bit we saw silver stocks down to about 103 million ounces in mid dec. I believed we would break below 100 but at least the momentum is going in the right direction into next year.

Another hit for this year was my prediction that 43 million Americans would be on food stamps in 2011, considering last months numbers put it at 42.9 million I’m pretty sure Dec can add a meagre 100,000 to the rolls. I think my 5 year at 60 million food stamps receipts is still quite doable, assuming of course food stamps still exist when the government goes FUBAR.

Oil, I saw $100 and we’ve just recently touched $90, so a miss. In Canada we have seen regional shortages and price spikes attributed not to shortage of crude supply but the closure of the Montreal refinery and a corresponding shortage of distillates. Big oil has us by the short hairs and figure they can cut production and then rationalize higher domestic prices rather than refurbish and update old refineries. The bonus however people will become acclimatized to higher fuel price and with hopefully begin to adjust their behaviours.

I missed bank failures badly 157 vs 250. I don’t see how the at risk list can keep growing at this pace yet the actual failures does not keep up,, my guess is they are pushing failures off to the future somehow with flawed accounting practices. A great deal of commercial property is financed by region banks so I still expect another huge wave of mid tier failures.

All in all the trend I see is continuing but I seem to be over anxious about how fast the fall will be, I know Rome did not fall in a single year but damn I don’t want this to linger and linger I just want it all to blow up, get it over with so we can start working on a new model.

Locally I see an awakening with many Transition towns, Post carbon groups and such popping up in many communities, this is a good thing and with luck many of these groups will establish and flourish before all hell breaks loose. Me I’m waffling between adapting in place with illegal chickens in my backyard or going all out and moving to a planned eco community where a number of families can attempt total food security, reskill in sustainable living and build a functional, inclusive and caring community. Pipe dream??????

I know I’ve not been posting a lot this year but I still appreciate my readers and their feedback, I know you’re still out there from my hit counter and the occasional Adsence cheques and I thank you for your support. There are many voices on the web saying much the same thing and sometimes I feel I’m just a very weak voice in a large off key choir. I’m often frustrated by the intransience and stupidity of the main stream but regardless I will continue to post when I can. It’s imperative however that we all look a little inward and begin focusing our efforts in preparation for an ugly future. It’s obvious that we cannot educate or save the majority in time but please be open to your neighbours, friends and family. Share if you can, educate where you can, encourage where you can and be respectful to those who screwed up. The future could suck real bad or we can work to make it suck less, Your choice.

Clear sailing towards silver riches

I’ve bought a reasonable pile of silver over the last 5 years and I’ve held it through some crazy gut wrenching turbulence, some that came damn close to shaking my confidence in bullion. Today that fear is entirely gone.

I watch the market daily and I’ve seen the recent attempts to drive down prices and I can say with great confidence that the tide has turned decisively in our favour. Sure they can knock the price down occasionally but no longer can they nuke the market back 30% in a matter of days, their control is slipping.

There are a number of very encouraging signs in today’s silver markets that ensure this quite profitable run will continue for some time.

1. The number of new converts in both blogdom and the financial media who are not scared to state the obvious facts about silver’s supply and demand issues.

2. Advanced technologies are using more silver each year. Solar, high temperature super conducting cables, antibacterial coatings/fibres, and silver/zinc batteries are all expected to see significant demand growth

3. Despite higher prices, demand is making the market for physical silver very tight. Many reports claim there is little to no small silver around for delivery.

4. Few pure silver mines are opening ensuring that a quick fix to supply issues is not going to happen.

5. The amount of silver on deposit with the Comex is shrinking at a nice steady rate. While physical inventory has shrunk to about 107 million ounces, outstanding contracts for “potential delivery, represent more than 700 million ounces. At some point industrial users will panic if inventory shrinks too much; that’s when the real fun starts for us.

I can’t promise prices will not slump a bit from today’s level but I have no fear that this market can be brutalized the way it has been in the past. If you have the means and can find anybody with silver for delivery make that purchase while you can.

I don’t have time to check ALL the vendors and inform you who has stock but I do know that First Majestic Silver restocked this week and have sizes in stock today.

My last couple of purchases have been from First Majestic and I’ve been very happy with the product and the service. Those 1kg bars are beautiful, well packaged and stack so very nicely.

Tell them I sent you, maybe they’ll buy some advertising or send me a mug ;)

Silver poised to soar on manipulation report

If you read nothing this week you should read this short quote from Bart Chilton of the CFTC with regards to the silver market.

"There have been fraudulent efforts to persuade and deviously control that price,"

No hedging or waffling in that statement is there?

While the CTFT has not reported on its two year investigation into silver market manipulation, I believe this quote is an attempt to telegraph to the market that these complaints will be totally substantiated and very soon.

While I'm not entirely clear as to the extent of CFTC powers to fix this problem, I assume it could lead to criminal charges, fines, position limits perhaps even trading bans.

This could very well be the event that finally frees silver to find its own price level, one which I believe will be a hell of a lot closer to its historical ratio than it is now. My bet is a 30:1 silver to gold ratio (or better) within 2 quarters if the report comes out proving manipulation. That would be about $44/oz

It could however be a lot more explosive than that so I’d suggest you get out there and clean out the coin stores now. Paper will be repudiated very soon, demand delivery on contracts and certificates if you have them or cash them out and go find physical bullion somewhere else in the market. Many junior miners still look quite undervalued; if you have money locked into retirement plans do some research on pure silver plays.

I think this is going to get fun.

Another silver failure to deliver story

This could just be a case of Scotiabank behaving badly, being overzealous, not understanding how to deal with a Power of Attorney, or just having zilch in the category of human decency. What ever the reason Scotia deserves all the bad press they can get over their treatment of this dying women.

On the other hand this could just be a large bullion bank doing its best to make damn sure this obviously savvy lady did not convert her silver certificates into bullion, figuring if they delayed until she died her kids would be more than content cashing them out in fiat dollars. In the end she did finally get her bullion but how many other dying customers would have gone to this effort?

Which is worse, no compassion or being self serving bastards? Not much of a choice is it?

Banks are evil, corrupt and working for their best interests not yours. Please people, if you have paper silver demand redemption and tell your friends, neighbours co-workers etc the same message.

The warning shot heard round the world

All of a sudden everyone started screaming back and forth across the room “Fuck, don’t believe the screens this can’t be right“, yelled one trader, an IT guys popped his head up “hey, what’s wrong everything was ok a minute ago….. SHIT! That ain’t right.”

Such were the opening moments of yesterday’s crash/glitch/clusterfuck on a Canadian Bank’s trading floor as reported by a friend of mine. There was nothing confidential or secretive about what he told me, mostly he just explained his utter disbelief that complex trading systems would not notice and default a aberrant sized trade like the one some analysts claim started yesterdays run, yet traders tell him it sometimes happens. He’s also often amazed at how isolated traders from the real world but that’s another story.

I too find it disconcerting that these big banks, trading houses, and exchanges which process more artificial wealth than really exists don’t have any sort of failsafe to abort truly huge and obviously bogus/erroneous trades. I actually don’t find it surprising, just very unnerving. After all, we know that risk and money making is name of the game and whether it’s selling fake paper silver, leveraging ones position 30-40X or drilling deep water wells without a $500,000 dollar part that could avoid a blow out, people will eventually screw up. These complex systems which everyone relies on are no place to be cutting corners but people are stupid and markets reward risk not prudence.

The irrationality of markets where you can sell more derivatives than the entire value of decades of world GDP is staggering. The ability to sell stocks you don’t own or which in some cases don’t exist is irrational at best. The selling of commodities that can’t be delivered is unethical and should be illegal, yet these are the normal behaviour of our markets. If you’re not scared yet you’re a fool!

Speaking of prudence what the hell are people thinking running to the U.S dollar as a safe haven? If you looked at the risk of U.S monetary collapse for today only, things look pretty good but that’s not the point. Converting to the U.S. dollar as a safe heaven is akin to moving from Poland to the Ukraine in 1939, yes you’ve saved your ass for the moment but eventually a Panzer will still come through the front door. To be truly safe people need to move into physical bullion before the there is a real default in the Euro zone, U.K, U.S. or Japan.

I hope you noticed I didn’t say IF there is a real default because at this point it’s virtually impossible that it won’t happen. Just look at the EU’s big Greek bailout which requires Spain, Portugal, Italy, and Ireland along with the more solvent states to cut Greece a cheque. How the hell can 4 countries which are being downgraded and will require their own bail out chip in to cover Greece’s bar tab? Does that make sense to you? Of course in these days of fiat currency they could just institute a rash of currency devaluations/inflation. In my opinion destroying your currency so you can pay back dollars with pennies is a de facto default.

I’ve predicted for a couple of years that the EU was in danger of splintering and I think its inevitable now. Of course those Germans who think it’s a good idea have yet to realized that balkanization does nothing to safeguard their banking system which holds a great deal of the bad PIIGS debt. Either way Germany is screwed but a regional recovery would be more manageable when the corpse of southern Europe is unshackled from the North.

I'm not the only one talking about monetization or EU members leaving the union

Yesterday was a warning shot to point out that the market is to big, to complex, to reliant on computer trading programs that are obviously not adequately safeguarded, and filled with too many fraudulent/ethereal products. At this point the system is broken and likely impossible to fix. In addition the debt markets are in a mess with the demand for debt greater than the supply of credit hence the large monetization’s happening in the U.S. Most western countries deserve their debt to be rated junk and nearly all U.S. munibonds should be well below junk by now. In my opinion every paper promise is worth no more than 40% of its stated value, while productive land and physical commodities are worth several times their current value.

My advice for people would be start buying that gold and silver now while you still can, especially the silver considering the FCDC hearings on market concentration, and the rumours of a Department of Justice antitrust investigation regarding JP Morgan’s silver trading practices.

Stock up on food, water purification equipment, seeds and medicine. (I know someone will add personal defence items and that’s your call but I don’t need that conversation here.)

Dump non commodity based equities. For those stocks you insist on holding long term like dividend stocks, demand delivery of your certificates even if you have to pay for the service. Also make sure you vote your shares so the company can gage how big the illegitimate float is.

Vacation close to home and/or spend the money making your house and lifestyle more resilient to disruptions in energy supply.

Learn to garden.

Get to know and make common cause with your neighbours. Central government will be of no use in a collapse, community will be invaluable.

In Favor of Death Panels

I’ve seen a lot of talk about the “Death Panels” used to discredit Obama care and I have to say I’m totally in favor of a death panel, but it’s not what you think.

Watching the U.S. from the outside is like an animal lover watching the movie Old Yeller. I know the dog is suffering and as much as it hurts me I know that dog needs to be put down in a quick and humane manner lest it linger and suffer, either way however the dog still dies.

The U.S. is like Old Yeller suffering from a disease that will inevitably kill it.

The major difference is there has been no decision on when or if to euthanize the country and there is no mechanism to make such a decision. This is the kind of Death Panel that America truly needs, a non partisan highly skilled panel that can look at the least damaging ways to wind down and reset a nation. If it is too sick to save put it down now and begin to rebuild rather than suffer a long painful death.

Who should head this Panel?

Damned if I know!
I would expect you’d want economists, constitutionalists, State delegates, philosophers and political scientists but no bloody politicians or bankers, they’ve caused more than enough damage already.

Their Mandate?

To develop a transition plan from today’s debt ridden, top down, police state to some rational, affordable, sustainable model that respects the rights of both the people and the individual states while diluting the power of lobbyists, bankers and corporations. In my model I’d like to see more Vermont style town meetings and less mention of Washington DC, more hard currency and less paper, less big banks and more community banks and credit unions, more people and less corporations making decisions.

Might it create a new nation(s)?

If there is going to be any real change all ideas including allowing secessions must be entertained. In the end, provided the panel gives the people and the states what they deserve within the union I don’t see everyone running for the door. Should they fail however the States should be allowed to leave individually or as new regional nations.

Despite the painful decision, the boy in Old Yeller did the right thing and in the end got a new healthy puppy. Perhaps a nation can achieve a similar result if they make the expedient decisions.

It's worth a conversation at least.

2010 Predictions from the Canadian Silver Bug

I’ve been trying to ignore the predictions by other writers so I had best get these published before I surf anymore today.


I’ll try to keep it as brief as I can this year but you can always look at my five year predictions if you really want detail


Gold will continue to show weakness into January but I do not expect it will drop below $1000 (U.S. at least until they issue new dollars with less zeros sometime late next decade.) For 2010 I think we will hit at least $1400.


Silver (which I keep overestimating each year) will hit $24+, expect the slow run on the comex to bring silver stocks levels close to the 100 million ounces , and that much closer to industrial panic. I don't know that stock level will bring that panic but I suspect we we will find out in the coming year or three.


US dollar index will break down below the 70 level on the US dollar index as it becomes obvious that new debt cannot be borrowed just printed.


250 U.S. banks will fail this year. Despite claims that failures were slowing in the later part of the year I think an average of 5 a week for the year is more than reasonable considering the FDIC list of "At Risk Banks" is still growing and we've been shown that their estimates are opptomistic. As long as the at risk cataegory grows failures will grow, and will probably remian high for 2 years after the "At Risk" list starts to shrink. Creative accounting and wishful thinking will not save these banks and I believe we will see the year start with a flurrry of failures to make up for the lack of working fridays in Dec.


At least 10 major U.S. cities and at least 100 towns and smaller cities will default, declare bankruptcy and gut services and union contracts.


At 7 least U.S. State will default on payments but technically I don’t think they are allowed to declare bankruptcy. State pension’s plans will be gone or gutted, services and transfers to lower levels of government gone, state employees will get fired in droves.


As unemployment increases and benefits run out food stamp enrolment will pass 43 million heading for my 5 year goal of 60 million, $ value of food stamps will not be increased even as food inflation makes the program less helpful.


U.S. unemployment will hit 20% on the broaded based calculation the Bureau of Labour staticist use called the U6 currently it falls around 17%, the calculations that claim only 10.2 (the U3) are full of shit and do not represent the millions who've lost benefits, have given up looking or are underemployed, even MSM is now admitting the U6 number on occasion


Oil back to $100/barrel with a few regional shortages spiking it much higher due to weather or maintenance based plant failure. N Gas prices will drastically diverge between NA price vs European price. Europe's prices will rise much faster than ours will because they will have a tighter supply.


Housing will continue to hurt in the U.S. as housing stocks remain high. At some point the tens of thousands of houses being held off the market by Banks in order to buoy the prices will have to be sold or torn down. If they are sold a further glut of houses will nuke some regional markets in Florida, Nevada, Colorado and California by an additional 20% causing more zero equity dilemmas for home owners.

If they start to destroy houses (which they might be forced to do because of squatters or as they become derelict because of lack of maintenance) expect outrage and civil unrest and rightly so by the homeless. Leaving somebody in the house at even half rent gives banks some cash flow, keeps people off the street, protects children and protects the asset by maintaining it. Good depression bankers new this, bad depression age bankers lost a lot of money on homes they left to rot. It's not socialistic or charity to let people live in a house at an affordable rent rather than raze your own asset, it's sound business.


Full nationalization of Freddie and Fannie and AIG will return to the teet of government for yet another life line just as GMAC did this week.


Full fledge monetization of U.S. debt. Between the roll over of old debt and covering new deficits the U.S. needs to sell in the neighborhood of 3 trillion in treasuries this year to unsuspecting foreigners.. face it folks there are not that many unsuspecting foreigners left.


Sovereign debt. There will be more problems like Greece and Dubai World this year. As I've stated a number of times Spain, Portugal, Italy, Greece, the Baltic states, Ireland, Hungary, Ukraine and many others are financial basket cases. Some are deeply in debt and in danger of further credit down grades, Others had their own housing booms but have yet to pay the piper for the fall as banks (many nationalized) have refused to sell their excess stock at market price. The varied levels of debt, corruption, economic model, fiscal need are making the entire EU structure unstable. While full dissolution is unlikely at this point I can see the Baltic States not making their final qualifications needed to adopt the Euro and I could see someone like Greece, Spain or Portugal reverting to their old domestic currencies.


The U.S. and U.K. both deserve a staggering credit downgrade but don't hold your breath. A downgrade , especially of the scale required would explode the derivatives market and make recent disasters look insignificant. What needs to be done won't and the fraudulent system will be maintained until a U.S. default or massive dollar devaluation.


While I don't think we will actually have famine in North America there are going to be some major changes coming to the world markets and the rash of crop failures is going to bring much higher prices in the west and regional food shortages around the world. Just last week there was a convincing piece about bogus U.S. crop predictions and the chances of supply issues with corn and soy, you can read my post on it here


The end result; I expect much higher food prices by this summer, increased farm failures and livestock culling as feed costs and probable regional droughts ravage the small farmer. Third world export restrictions and local famine will increase. As per my other prediction, Foodstamps will not increase in value and hunger and poverty will increase in the U.S.


Home gardening and home livestock will continue to grow whether to save money or as part of a larger relocalization movement. Illegal livestock will pop up in all major cities, in most cases no one will care if its done cleanly and besides the by law officer will be swamped or out of work. In my own town I expect to start a Transition Towns movement this year to promote localization,


Increased radical action and perhaps domestic terrorism by anti globalist and climate change groups. They feel politics has failed them and desperation feeds desperate action. A few notable environmentalists may be jailed for incitement.



For Canada I expect flat or a slight increase in unemployment

Housing will begin to soften again, there is no real glut in most cities but the prices are not affordable and if food prices and/or interest increase people will lose their homes, or stop upgrading.


Our interest rates will stay low mimicking the U.S. lest our dollar go to 1.20. That said I don't think the BoC can talk the Canadian dollar down below parity for much longer.


Easy money might spark Canadian inflation but the only fix would cripple exports, so expect the BoC to ignore or cook the stats.



I did end up seeing a couple of sets of predictions and I think for Americans the National Inflation Association has a pretty good list including some interesting political predictions.


I probably missed some important things I wanted to cover in my haste so I'll post an addendum eventually. If you see something glaring I did not comment on just ask in the comments, I'll just make something up on the spot ;)
There are no SHTF variants on the predictions this year but the shit is still coming I just can't guess when things will go boom. The key is the dollar and if it breaks much lower than my 70 USD it will be in free fall and all the commodity prices will soar well beyond my predictions.

I am however certain enough that real bad times are coming that I've added a preparedness store to my sidebar

2009: Quickie post mortem on predictions

I don’t know if I’m too depressed or too eager but I keep expecting the SHTF each and every year I make these predictions. This year it did not hit the fan so to speak but neither did we find ourselves in a real recovery like the rat bastards in Washington and Ottawa like to tell us we were. The economy continues collapse like a smoldering bonfire just waiting for a red neck with a can of gas to blow it up real good!

I really blew it this year on my predictions for silver and energy, for energy it makes sense as demand fell faster than supply did but I still cannot understand how, with gold going well over $1100 that silver could not hit a mere $20, a number that it took out last year. Silver still has heavy investment demand, silver is still being destroyed, and silver is still being heavily withdrawn from the Comex depositories closing the year down to about 112 million ounces. That said silver’s industrial demand is off and the level and concentration of silver shorts remains criminally high but that should not have kept it from reaching $20 and closing the silver/gold ratio.

If anything silver has gained more potential and volatility as this disparity in prices and ratio continues. Some day it will blow up, we just need to be more patient and continue to accumulate while bargain prices continue. Robert Kiyosaki of Rich Dad fame jumped on the silver wagon this year but typically got it wrong when told people to buy ETFs. Goof! Anyone who knows the real potential of silver knows that it’s the fraud and leverage involved in paper products that allows the prices to be manipulated. Had he really understood the silver story he would have told people to go buy a roll of rounds or a honkin big bar. Still he raised silver’s profile and perhaps some of his simpleton readers will do some additional research.

On the dollar index I was damn close to my prediction until the Dec rally hoofed me in the head.

On the positive side I did hit my highs on gold; I predicted at least $1100 and ending the year above $1050. Yeah for me, that looks pretty accurate. As well I hit my goal for bank failures of about 80 and then blew by it I think ending up at about 140.

Other general predictions fulfilled this year

CPI returning to the positive later in the year

No housing recovery

Increasing unemployment all year

Commercial real-estate would begin to hurt

Obama would prove to be little different than his predecessors, spending money he does not have and warmongering. Anyone who thinks the president runs the country is nuts; he may(but not necessarily) decide who to attack but he’s simply a low paid lackey who doed the banks bidding. If you expect him to hold the guilty responsible for last years fiasco you may as well start digging his grave now because they won't let it happen

Over all I had the trends right just not the scale.

I’ll post up a couple of interesting articles I’ve found as well as my own 2010 predictions in the next day or two.

Happy New Year.

More Chaos Ahead

It’s seems quite obvious that we are about to see something quite drastic happen. Chartists will tell you that gold is way over bought yet you have to wonder if the charts mean anything when the system starts breaking down and we start having massive failures throughout the economy, and those failures are out there.

The example of Dubai World should not be a shock to anyone, you can’t build up $60 billion of debt in a construction spree and expect to go unscathed in this depression; the bigger question is how many other Dubai Worlds are out there? My guess would be several to many!

What about the growing number of countries that could have their own crisis moments?

Japan has done everything but hand out printing presses to the public, yet deflation continues to pop up. To make things worse they have an insane level of government debt and the ability to sustain this debt and further stimulus is hampered by a drastically declined savings rate. I think Japan made a big mistake by not allowing deflation to take place naturally over the last 2 decades. The fact that they have a shrinking population should have allowed flat or slightly negative growth without the need to force growth through stimulus spending.

Greece has debt issues that could force the EU to bail it out or if they won’t it might force them to kick it out, or allow it to leave gracefully. The Baltic States look unlikely to qualify for Euro adoption as they struggle with massive GDP drops, debt and the need to maintain a stable peg to the Euro, while Spain, Portugal and Italy all face debt issues of their own.

The Fitch rating agency suggests the UK could have its debt downgraded next year and the UK has one hell of a lot of debt.

Even oil rich Russia has issues with large debts owed by both state and private enterprises such as Aluminum producer Rusal (which has defaulted on debt) and Gazprom, while both the Ukrainian state energy company and railroads require debt restructuring.

Can China maintain the growth it needs to keep all the peasants leaving rural areas busy and content?

There certainly has been a lot of growth in China but at what cost and how well planned was it. Monetary inflation is at high levels, the artificially weak Yuan is souring relations with the west as more and more jobs bleed to China. China has growing industrial capacity without markets for it. How exposed are Chinese banks should a recovery not allow them to utilize surplus plant and population?

China has been a wonder story of growth but lets face it, these guys are total novices in when it comes to running a market economy and since the experts screw up regularly its only a matter of time before something blows up in China’s face.

Bringing it back to the metals it’s no wonder that gold continues to move up so quickly (even when over bought) as no chart can tell you that the assumptions used to decipher it are no longer relevant and by what’s happening in rest of the economy taking these assumptions as valid and immutable is reckless at best.

An important item that does not seem to be getting any press right now is the rapid declines in the Comex silver stocks. I got out of the habit of checking these for a few months but when I came back I was surprised to find stock levels below 116 million ounces and even more shocked to see it fall to about 111.5 million ounces in just a few weeks. I don’t know what the magic number is but sooner or later industrial users are going to panic and the price won’t jump a buck or two but by $10 or more.

All I can say for sure is there will be more chaos ahead.


Friends of the Canadian Silver Bug might wish to help him out by voting for him in the 2009 Canadian Blog Awards. I'm nominated in the Professional life category and you many vote here, ranking as few or as many of the blogs as you see fit

Good news for India, Good news for Gold Bugs

Today it was announced that the Indian Central Bank purchased 200 tonnes of IMF gold for about $6.7 Billion between the dates of Oct 19 and Oct 30th, at market prices. This is a great piece of bullish news for the metals community

Why good news for India?

This is good for India because it shows they are serious about rebalancing their reserves away from crap like U.S. dollars. Its good news for India in that they got in to get their share before China gobbled it all up. Having one country monopolize gold ownership is exactly the model that the U.S. used to abuse the world with its reserve currency. If we are to ever achieve sound money again many countries need to hold large amounts of bullion to back their currency with, If only Canada had enough sense and balls to step up and buy the other half of the 403.3 tonnes the IMF is authorized to sell

Why should gold bugs care?

This sale gives a big psychological boost to the market as it not only validates the current price as a fair one but it also shows that the Indian Central Bank thinks it can appreciate further from this point. The sale was direct to a CB showing that the IMF was more interested in getting top dollar for their assets than attempting to flood the market and discredit the current price; this could have been disastrous for the spot price if it was simply dumped on the market.

We should be happy that China did not get first dibs on the gold and take it all. Disbursement rather than consolidation is good for the market. We also have the added satisfaction that the IMF has that much less bullion to manipulate the market with later.

All in all this is a good thing for the market! Gold jumped over $20 today on the news, and that it great grabbed a languishing silver by the short hairs and pulled it up too is an additional bonus.

Healthy silver

I've talked before about the power of silver as an anti-microbial agent and here is another example of it's continued growth in medicine as Advanced Medical Solutions releases a new wound dressing containing silver to the European market.

Silver micro threads or nano particles have now been incorporated into hospital curtains, surgical scrubs, Silver sulphadiazine creams for burn victims and now this new line of dressing materials which all help to control infections even those cause by MSRA.

In the old days people claimed a silver coin in a container of milk would keep it from spoiling as quickly, other references said that putting a silver coin into a wound to stop it from turning to rot; apparently they were on to something.

Silver's anti-microbial properties are now medically proven and some studies even suggest that the addition of nano silver to older ineffective antibiotics can make them usable again.

I don't believe however that the internal use of homemade or Internet purchased Colloidal silver products in a preventive regime is wise simply because long term exposure has not been studied and there are no standards for concentration, particle size or dose when using these products. I'd not chance self medicating with colloidal silver unless it was an emergency and there was no other choice. I don't think it would hurt to use it as a wash for sores or as a non caustic disinfectant.

While medical uses are not going to gobble up millions of ounces overnight, silver does prove again it is one of the most useful of metals as it constantly finds new uses and ever growing markets.

Silver Bugs are destined to have a shiny future.