Is there a run on silver at the COMEX?

Ok I hate when this happens, I get lazy for a few days and don’t bother checking the silver warehouse stocks and when I go back for a peak I have one of those WFT! moments as silver levels have dropped from 124 million just a few days ago to 115.6 million ounces. This is big!

Why are stocks dropping, and why so quickly?
Why would someone remove their silver from storage? A margin call and a need to liquidate perhaps, or getting their personal assets away from ground zero for fear of something messy like a default happening at the Comex? Or is it just late deliveries not keeping the stocks up

I don’t know at this point, it might just be a fluctuation in storage levels corrected later in the month by mass deliveries or it could be the start of a run on silver.

I’ve not noticed any bad physical shortages recently, Scotia seems to have maples in silver and gold and there have been less complaints recently about delays at NWT Mint, (at least I’ve heard less). Yet I’m told that for each of the last 5 trading days 2 million ounces of silver have been delivered putting us on track to hit the monthly delivery maximum of 15 million ounces. This looks big folks go make a physical purchase if you can manage it.

Just to note that on Wed the trend did not continue and there as a small change in category transaction and a modest delivery of around 200,000 ounces.

Spring Madness

I want to know why anyone especially the market was shocked by lasts weeks move to monetize 300 Billion dollars of U.S. debt?

It’s not as if many people like me aren’t screaming “The End is Nigh” and yet the market and people in general seem ignorant of the simple reality that new money to cover these massive stimulus and bailout packages must be either borrowed or created from nothing. They also seem oblivious to the idea that there is not an endless market for U.S debt ignoring the warnings of people like ex Comptroller General David Walker who spend his entire term of office pointlessly trying to convince a nation it was broke.

Last weeks announcement should not have been a surprise to anyone and more importantly neither should the next wave or forty waves of monetized debt that is destined to hit the market. This trend will come not only from the Fed but most of the worlds major central banks who can neither find enough suckers for their debt issues nor want to have their currency appreciate out or a normal trading range with their biggest customers.

This a wake up call for the many people who did not believe this moment would actually arise; you have been given fair warning that monetization, currency devaluation and inflation, instead of austerity are the chosen course for western nations. Now is the time to take any money you don’t want destroyed and place it in gold, silver, food, productive land, or some other real tangible asset. This is the very scenario that brought me to asset based investing several years ago and with this confirmation being so open and so blatant we can only expect that further moves to monetize debt will be fast and furious. You’ve been warned, Act!

Other stuff

In the too stupid to believe category the FDIC saw fit to criticize a Massachusetts bank that has managed to get through the recent credit crisis with no bad loans.

The bank, East Bridgewater Savings Bank was chastised for neither "lending enough" nor "promoting its loan products" enough.

Great time line, East Bridgewater savings gets shit upon on Tuesday, and then on Friday afternoon 5 financial institutions, 3 Banks and 2 Credit Unions fail, (FDIC numbers do not include credit unions) The people who run this small but sound bank should be held up as examples of good management not badgered for refusing to take unmanaged risk.

When I wrote The Great 2009 Bank die off on Feb 16 I noted 13 failures so far this year.
Since that time, a scant 5 weeks the tally has grown from 13 to 20 failed banks, and it’s only March people! We could easily hit the 80 failures I surmised earlier in the year


There is also some definite clumping of these bank failures, 3 Georgia, 3 Illinois, 3 California, 2 Florida and 2 Oregon, 10 of 20 failures in 5 states, with all but Georgia being in the top 10 foreclosure states.

Spring time warning.

I don’t care how secure you are with your little pile of gold and silver or that sweet job with benefits but you have to face the reality that very soon the shit is going to hit the fan at a velocity just short of warp 9. Be it civil unrest, dollar destruction, 30 % unemployment or simply the bankruptcy of major shipping or food processing companies, there are going to be major disruptions in the status quo. Take a little money a little time and put aside a little extra food and necessities. If you have the land and physical ability plant yourself a garden this spring and buy a book and the equipment for canning. While Silver and Gold are financial insurance, you can’t eat them and you can’t medicate your sick kids with them, so you should look to other aspects of your personal emergency plans.

New Silver Bugs and other stuff.

It would seem that the fear generated by all the failures, bailouts, evictions and graft is a great motivator in driving people to finally purchase silver. I’ve blogged for several years about supply deficits, historical ratios, the destruction of fiat money, inflation and general financial chaos but at no time have I seen so many people jump on board in such a short period of time as I have seen recently.

In the last two weeks I’ve had three acquaintances and one reader make their first silver purchase. I’ve also had several personal inquires asking for more information (apparently some work place sleuth has connected the real me to the web me). I’m glad to see this trend because in all honesty I’m all tapped out and can’t see myself accumulation very much more in the near future unless I suddenly become the best and most famous blogger in cyberdom and the ad revenue begins to reflects this. (Not bloody likely)
I’d really like to see this market pop sooner than later so I can turn my silver into land and finding others to absorb supply and spread the legitimacy of silver investments was the key reason to start this blog in the first place and I’m glad to see the recent growth.

Something I’ve told my friends who have bought silver recently is something like this. Even if you only bought a meagre 10 ounces you’ve now become a very rich person. World production sits at about 670 million ounces a year and world population is just over 6.7 billion, or 1/10 of an ounce per person per year. Your purchase represents 100x your share of the worlds silver money created this year. Estimates of the total world silver stockpile ranges from 1 to 10 billion ounces once again proving you have more than you share of the world’s real money. Silver is real money, silver is rare, silver is industrially vital and you have it.. In the famous worlds of Daffy Duck "I'm a Happy Miser"



I don’t have a lot to say these days as other concerns are keeping me busy but it looks like we might have a couple of weeks of correction, at least that’s what a couple of chart fetishers tell me. They say we are well overbought and that a correction and consolidation need to take place for further gains, they also tell me as long as it’s not too deep or prolonged this is a dip we should be looking to buy on. Me I’m no longer sure the chart can predict everything, sure some guys trade the chart exclusively but panic and the small size of the metals market could lead to a nasty surprise. I’m holding my HBP gold bull ETF and may even add a bit (a very small bit) gold correct below $900, as for the actually metal “From My Cold Dead Hands” or a 20 fold increase in price. As for silver, unless I trip over some rounds or junk silver on a good day when I have cash I can’t see me buying much this year.

For locals, Scotia Bank does have maples in stock, but I’m not sure what else. When you can find product right now there is little variety in manufacture or size, simply buy what you can find. First Majestic direct sales must be getting its act and supplies chain in order as the limits on some products have been increasing.

As I understand it, small gold is similarly scarce in the GTA.


Continued bloodshed is taking place in the markets with yet another bank, the Silver Falls Bank of Silverton, Oregon, failing last Friday and no doubt another or eight will be thrown on the bon fire tonight when the FDIC Ninjas descend.

The Big three story is getting just too stupid; there is too much supply, too much debt, and too few good products and much like the movie Highlander “There can be only one”, or at the very least one must be left to die so the others have a better chance.

Chrysler is private so let the fund that bought them bail them out, GM is hemorrhaging like an Ebola victim leaving Ford. As the only company not asking for money at this point Ford should be the victor. Their cars have got a lot better and if they started making or importing their European models for N.A. they could easily compete with the Japanese.

AIG, shudder I can’t even go there, what a mess

If that was not bad enough the IMF believes up to 16 countries face bankruptcy and has no funds to deal with the problem.

Lastly I’d like to remind you that financial troubles are not the only things that are endangering our way of life and invite you to peruse my post on the phenomena of Peak Oil Doomers

The Great 2009 Bank Die Off

I had to go back and check the date of my last post because I could not believe that the total bank failures for the year had jumped from 9 to 13 in a single week. This is quite an acceleration of the existing trend and definitely supports the view the U.S. is going to face a major bank die off this year.

The new banks failures reported on the FDIC site are the

Pinnacle Bank of Oregon, Beaverton, Oregon, with approximately $73.0 million in assets was closed. Washington Trust Bank, Spokane, Washington has agreed to assume all deposits (approximately $64.0 million).

Corn Belt Bank and Trust Company, Pittsfield, Illinois, with approximately $271.8 million in assets and approximately $234.4 million in deposits, was closed. The Carlinville National Bank, Carlinville, Illinois has agreed to assume all non-brokered deposits.

Riverside Bank of the Gulf Coast, Cape Coral, Florida, with approximately $539.0 million in assets and approximately $424.0 million in deposits, was closed. TIB Bank, Naples, Florida has agreed to assume all non-brokered deposits.

Sherman County Bank, Loup City, Nebraska, with approximately $129.8 million in assets was closed. Heritage Bank, Wood River, Nebraska has agreed to assume all deposits (approximately $85.1 million).

These new failures are expected cost the FDIC upwards of $330 million bringing the yearly total to about 1.5 billion, and its still February! How's that for a burn rate?

You have to remember that all the bail out money floating around has been going to the big banks that sold all the toxic products in the first place. While these little guys may have made some stupid mortgages to people they did not create the sea of derivatives that are bound to destroy the whole system, nor were they the ones advising their clients to buy the same products they were shorting. The system is corrupt and will let scores if not hundreds of these little banks fail.

How much more proof do we need to realize they don't give a crap about the little guys neither the small banks nor the public in general? This is all about saving the companies that politicians hope to work for some day, companies that politicians expect to get donations from or those companies already owed favours for past donations.

Most importantly these bailouts are designed to further the agenda of consolidating financial power to the detriment of the masses. These bailouts are corporate welfare of the worst kind because they are not even doing it fairly. The bigger, the guiltier and the more incestuous your relation to political power the more likely they will save your corporate ass.

"and the Guilty will inherit the Earth"

Dominos are falling

I just noticed that the several banks when under last Friday and I decided to go to the FDIC home page and get a total count for the year. While I was there I decided to look at other years failures to point out the trend and this is what I found

2007 1 lone failure
2008 24 failures
2009 9 already and its only Feb 9th



If this trend continues at only the average of 4.5 every month we could be heading for over twice last years failures, however if we go with the higher number of 1.5 banks a week so far this year we are looking at 78 failed banks.

From the existing 9 bank failures there is total cost to the FDIC of somewhere just over $1.2 Billion or $133 Million for each bank. Multiply that by 78 expected bank failures and the total losses for the FDIC would be about $10 billion which is actually not that high considering one of last years biggies like Indy Mac was estimated to cost the FDIC from between $4-8 billion alone.

Of course our 9 bank sample for this year is small and so far and does not reflect the presence of some of the larger banks that failed last year. My estimate for last year puts total cost to the FDIC at over 6.5 billion or 271 million per bank which extrapolated forward to our 78 bank target this year could put us at about $21 Billion.

NOTE, Last years numbers from the FDIC reports do not give an estimate FDIC cost for the WaMu failure, so real numbers could even be higher


So my quick and amateurish look at the FDIC liabilities for this year could range anywhere from about $10 billion to over $20 Billion.

I guess compared to TARP and the stimulus packages its pretty insignificant but it does show that FDIC will probably need a bailout next year if not later this year.


Just something else to consider.