The Winds of Change

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

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

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

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

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

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

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

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

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

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

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

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

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

AIG: The destruction of the American financial system?

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

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

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

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


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

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

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

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

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

Nouriel Roubini's view of developments

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

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!

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

GOLD EXPRESS REFINING LTD
SUITE 401
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!!!