Eric Sprott: "Paper Markets Are A Joke: Prepare For Bullion Prices To Go Supernova"

"I think that the prices will continue higher. I mean the amount of money printing is unbelievable. I just think you have to take that initial stand in terms of buying it. I use the James Turk analogy: just keep dollar averaging. We have gone up eleven years in a row, this year it looks like it will be no exception; I would certainly think next year will be no exception. If we ever have QE3 announced, I think gold and silver will just go absolutely bonkers here. And so I just think you have got to step in there and own it; we’ve had these fears all the way along. You know, $400, and $500 and $700 and $800 dollar gold, everyone was afraid it was a one-time thing. I don’t think it is a one-time thing, I think it is a secular thing. It’s going to carry on for quite a while here until we find some resolution of these problems. And the resolution probably will be some form of default where people just have to expunge debts that cannot be repaid. So, you have got to be in some asset which will not be affected by that." So predicts Eric Sprott, founder of Sprott Asset Management and famed investor. In this wide-ranging interview, he shares his insights on the precious metals markets - specifically what investors need to be aware of in terms of the way the markets are currently managed (manipulated), the macro outlook for the economy (grim) and the true value of gold and silver (very underpriced; particularly silver).

S& P warning adds debt threats to Greece/Portugal downgrade/China banking problems

posted by Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 1 hour ago

Good evening Ladies and Gentlemen: Gold today rose today having taken the lead from Europe yesterday. Gold finished the comex session up $30.00 to $1512.20. The price of silver had a stellar day rising by...

GM's "Channel Stuffing" Goes Mainstream

"General Motors Co. stocked Jim Ellis Chevrolet in Atlanta with plenty of Silverado full-size pickups in early 2011, part of a wager on a strong economic recovery. The strategy is backfiring. “We thought that this year would bring back the kind of economic activity that would translate into us selling more trucks,” Mark Frost, the dealership’s general manager, said in a phone interview. “It’s not happening.” Supply of Silverado has ballooned to 6 1/2 months worth at the dealership, a figure Frost, 52, calls “a little scary.” The Detroit-based automaker, 33 percent owned by the U.S. after its 2009 bankruptcy, has 280,000 Silverado and GMC Sierra pickups on dealers’ lots around the country. If sales continue at June’s rate, that would be enough to last until November." Thus begins a story just published by Business Week covering a topic that Zero Hedge has been pounding the table on since last December, and which just hit an all time record for fresh start Government Motors a few days ago - namely the firm's propensity to dump as much inventory as possible on dealer floors. Granted, many have been quick to mock, ridicule and ignore our glaringly obvious findings (especially since these come at a time when the light vehicle sales SAAR is back to a 10 month low, and likely to plunge once the long overdue inventory liquidation finally takes place), although now that the topic of General Motors' "strategy" of overfilling dealer inventory is front page news, it finally may get the overdue respect it deserves, especially since as Jefferies' Peter Nesvold cautions, this is nothing more than new GM reverting to the habits of the old one (the one that filed and needed taxpayer bailouts for a few hundred thousand union workers).

Fiat Money

Posted by: thetrader

Post date: 07/05/2011 - 18:55

Let’s not forget we are still in the fiat money vicious circle, and all is proceeding according to plan. European Core soon to come, followed by the US and a full blown Currency crisis. Long’s Chart from last year presented without further comments. From www.thetrader.se

The Chinese Black Swan

Posted by: Vitaliy Katsenelson

Post date: 07/05/2011 - 14:48

China is slowly starting to face the consequences of its actions

Silver: It’s All About Inventories

While I have long since given up the “hunt” for intelligent analysis from the mainstream media on the silver sector, I have also become somewhat frustrated with much of the commentary I’ve seen from the more reliable/better informed commentators within the silver sector. Two “camps” seem to have emerged, separated by what I can only describe as a logical disconnect.

On the one hand, we have a group of very vigilant and bullish commentators who are squarely focused on the melodrama of ‘evaporating’ inventories now taking place in the Comex exchange (and any/every other warehouse where significant amounts of silver can still be found). Their reporting, while insightful, is almost surreal.

They are essentially engaged in a “countdown” until some “default” event occurs in the silver market, something these commentators look forward to with extreme anticipation, as to them this would signify “the end” of the silver-manipulation game the bullion-banks have been playing for the last 30 years (and actually much longer). Conversely, since such a default event directly implies the financial disintegration of the ‘monster’ silver-short, JP Morgan, I have much more “mixed feelings” about what such an event portends.

Living in the age of “too big to fail” banking Oligarchs, it is obviously naïve in the extreme to expect either JP Morgan or its servants who run the U.S. government to simply allow this bankster to be vaporized by the implosion of the silver market. Such an event would require settlement of its $100’s of billions ($trillions?) in losses on its gigantic, silver “short” position and its much larger losses on its silver derivatives – which it used to ratchet-up its suicidal leverage still further.

A much more realistic scenario is that when there is a default at the corrupt Comex exchange that the crooked operators of that market will simply suspend all trading in the silver market until the “disruptions” in the silver market have been resolved. Translation: the Comex will simply cease to honour/enforce any of its legally-binding contracts until after JP Morgan has found some way to weasel-out of its own annihilation.

Having spent countless hours studying this “equation”, I have concluded that there is no plausible way for JP Morgan to extricate itself from its self-created financial suicide other than through the U.S. government once again confiscating the silver held by its own citizens (as it did in the 1930’s). Given the magnitude of the silver-losses being hidden by the criminal-shorts, it is very unlikely that U.S. silver-confiscation alone would be sufficient to rescue all of the banking Oligarchs who have taken part in this manipulative shorting. Thus, we could easily see concurrent “confiscation” schemes in many/most/all Western nations.

Let me qualify that comment by noting that at this point “confiscation” would start (and likely end?) with all of the “bullion” held in bullion-ETF’s or bullion “accounts” – which were based in jurisdictions taking part in confiscation. The vast majority of personal bullion holdings are contained in this form and can be seized (literally) through nothing more than the click of a mouse.

It is highly unlikely that our governments have any appetite for smashing down doors and directly seizing bullion by force. First of all this would require a massive expenditure of resources (and extremely bad “optics” for our fascist governments), for a limited yield of bullion. Secondly, especially in the U.S., many of the same people stashing significant quantities of physical silver are also stashing significant amounts of guns and ammunition. They would not get much of this silver without (literally) a fight. Most likely, our governments would not go beyond the mouse-click – which also explains why the propaganda-machine has done its best to “herd” bullion investors into the large bullion-ETF’s.

Meanwhile, at the same time as all of this is occurring, we see an equally surreal discussion taking place in the silver sector regarding price. We have earnest, and in many cases very astute writers talking about “rising demand” and somewhat stagnant mine-supply, and then rather timidly assert that it was their opinion that silver prices “should” move higher. Even the highly esteemed Eric Sprott fell into this mental trap of understating the dynamics of the silver market. Read more: Silver: It’s All About Inventories