When the cabbie is selling silver.. not until then, sell.

Is he really referring to gold and silver bullion or to ETFs? I’ve become aware that experts can be bullish for bullion but are not expanding their stock of the actual metals.

I feel disappointed in their much publicised comments when I discover its ETFs they’re buying with such great enthusiasm. This happened with Soros, I recall.

You won’t sell much of your silver if you read ‘Peak Oil and the Second Great Depression’. The author makes a good case for deflation, to be followed by inflation, to be followed by double-digit inflation for many years. (But probably not Zimbabwe style runaway inflation.) The US National debt is so huge, and the power of the wealthy to stop large tax increases so great in Congress, that inflation is the only way to manage the debt. I read the book twice. It is rather elegant, at least to me. The budget deficit this year will be about $1.65 TRILLION.
And don’t forget Jim Rickards saying on CNBC a while back that inflation was the PLAN of the Government as the only way to reduce the value of the debt, thus avoiding a complete collapse. But he didn’t weave oil into the story like Worth did.
And we are nearly half way to my end- of- year Dow target already. But oil is heading to $140 in a few months, unless the Marines hit the beach in Libya and take Tripoli. Ben’s wealth effect won’t work too well if gas goes to $5 a gallon.
EMI Music sure kept the movers busy at their Abbey Road studio in London today. You can see their front gate at http://www.abbeyroad.com if you remember The Beatles last album cover, or want to see what the weather in London is like, LIVE with sound. Too bad you can’t rotate it like some web cams. I had to go on Google Earth to see the rest of the street and the front of the studio building with the camera.
They actually put your address on the front of your house in Street View now. That is pretty amazing. And you can use the cursor to get the land elevation! I want access to the computer that will answer your verbal questions. Now THAT would be a stock that I would buy.

James M., I don’t understand your cryptic comment! Since you wrote it for our well-being, please explain it for me. Thanks!

Can someone explain to me how Max Keiser’s idea of everyone buying silver could bankrupt JPMorgan? I guess I don’t really understand what is happening when a bank takes a short position on silver, for example.

If JPM sell silver, which they don’t possess, at $20 per ounce with the promise of sending the silver to these buyers in six months time, but find they’ve got to buy the silver at the six months point at $30, then they’ve made a loss of $5 times their, say, 100,000 customers.

Have I written garbage here? How does JPM make its profit and how can it be sufficiently sure that it will make a profit by shorting silver?

I understand that there has been backwardation on silver for some time now. Since the spot price is constantly higher than the shorted contract price, is anyone making any money on shorting silver these days?

Again, is the last paragraph garbage?

Finally, is Max Keiser succeeding in his quest to bankrupt JPM?

@ Bill, with a Post Office near Slidell:
Interesting commentary. Jim Rickards also said that the FED can and will “proclaim” an end to QE, but that they would continue to engage in a “Stealth QE” into perpetuity, since they now have over $3 trillion on their balance sheet and can spend approx. $750 billion per year on Stealth QE without advertising it.

For the record, the “real” budget deficit last year, after adjusting for “accounting gimmicks” was almost $ 2 trillion; ditto for this fiscal year, although the gimmicks will surely continue.

Food for Thought:
About 4 years ago, a trusted old and wealthy friend told me that the government’s (and hence, the FED’s) secret plan was to monetize the tremendous government debt by 50% between 2007 to 2015, and by another 50% between 2015 to 2020, and that this plan was “cast in concrete”, independent of whoever was elected as President in 2008. It was also said that this was absolutely necessary, since it would reduce the effect of the debt by 75%.

Kinda makes older Americans long for the return of the “Silver Certificate” US dollar (i.e. in denominations of $1 dollar, $5 dollar, $10 dollar, and the $50 dollar . . . though I’ve only seen pictures of the $50 dollar silver certificate).

So yeah, those who sell their gold or silver at these nominal highs are likely to regret it by 2012.

@ John Mark –

In other words when everyman on the street is buying silver it might be time to sell, and not until then. Predictions are of course just that, a guess at the future, but in this case its not like the 1979 silver bubble, there are no Hunt bros cornering silver, and the the sovereign debt crisis is at center stage today. Drivers today are are inflation, speculation, and a new fear based driver. There was no fear in 1979, none, just anguish over gas prices going up. Plus gold is monetizing. That’s the real issue that nobody talks about much, certainly not in the main stream. Asian and Arab central banks are buy gold for a reason. Everyone sees the USD in a train wreck. Its quite possible, and even likely that we are going to see the PM parabolic this year. Then of course there’s the war. Too many drivers, not enough silver.

A fit example of gold monetizing is when equities are sold and these days instead of automatically parking proceeds in CD’s, the traditional short term method, some percentage are buying bullion, considering its going up, and USD down. I personally know very few people that own physical metal, almost none. 86% of the retail purchasing is done by Asians and Indians. Over the next two years, i think North Americans will get in the game. Buying silver will at some point become a fad, its guaranteed to happen.

“When the cabbie is selling silver.. not until then, sell.”
When the cabbie, your barber, etc are BUYING or explaining with sophistication how you can buy, then it is time to sell.

For an offbeat argument why gold is not in a bubble, chat to the delightful sales assistants at Dubai Airport. There is a raffle draw to win a 12.5kg bullion bar. It has run for a couple of months and only half the 5,000 tickets have been sold. It’s AED 720 per ticket and you receive a 1gm bar that sells for AED 200 in the same shop. Do the math. A very good deal by raffle draw standards. The slow take-up shows how unfashionable gold still is with Joe Public.

“If JPM sell silver, which they don’t possess, at $20 per ounce with the promise of sending the silver to these buyers in six months time, but find they’ve got to buy the silver at the six months point at $30, then they’ve made a loss of $5 times their, say, 100,000 customers.

Have I written garbage here?”
Yes. Fair question though. For a sceptical view, exposing similarly egregious arithmetic from the UK Guardian newspaper, see http://caps.fool.com/Blogs/jp-morgan-silver-manipulation/484711

Ed Note: Gold is still little understood and hardly owned by investment professionals let alone mere mortals, and as for silver the Financial Times failed to mention it in a list of best performing assets last year (it would have come top!)

James M., thanks for replying in detail. Would you define a bubble as being that period of time when the taxi driver is buying silver? If so, then we are not in a bubble at the present time even though the price is rising well.

If a downturn in prices is a correction, maybe an upturn in prices is a reverse-correction. I don’t like the word “correction” when there is a fall in prices, so I mock it with the idea of a reverse-correction being a rise in prices when the taxi driver is not buying. When he is, the price rise has entered the bubble phase, I suggest.

philcu, thanks for the link and your tactful help. I am surprised at the uncertainty expressed in the Guardian as to whether JPM are manipulating the market. It seems no one really knows and Keiser is acting on a hunch, guesswork, to see if he and others can embarrass the banking system seriously.

Also encouraging to see the variety of math in it, so I can feel less of a fool. For interest and understanding only, I am trying to understand what Wikipedia says about calls and puts, short and long ones.

I suppose gold is hardly owned and is less understood by investment professionals because they are likely to get much less money from advising their customers to go into bullion.

Yet, as Ed. said earlier this year, if your silver return is 500% from the beginning of the century and from shares 67% on average, who cares about a balanced portfolio of shares and bonds.

Perhaps the blogosphere will gradually help the man in the street to understand bullion investment and bypass the share investment managers. Hopefully!

@ James M: worthwhile remarks, especially your explanation about monetizing.

Gold & Silver Monetizing:
For the few readers on this blog who may not know, one of the primary reasons why governments & their Wall St. “agents” criminalize gold (& silver) is because they fear it; but gold “tells the truth” about the fundamentals of an economy.

Whenever investors pull their money out of the stock market, the government wants that money to go into bonds (or into Treasury bonds) or real estate or money market funds, but not into gold. If large amounts of investor money continues to pour into gold and silver, it’s a testimony to the “no confidence” vote in the government’s fiat paper; but fiat paper is one of the tools that governments use to manipulate their economies.

RE: JPM Manipulations in the Gold & Silver Prices

John Mark: . . . It seems no one really knows . . .

**** begin knee-jerk reaction to above comment ****
au contraire!

all Wall St. bankers know,
all Wall St. traders know,
all Sovereign Nation Funds know,
all politicians from major foreign nations know,
all big-time savvy investors know (ask Jim Rogers, Marc Faber, Eric Sprott)
all mutual fund houses with a gold fund know (they get raped by JPM)
almost all serious investors in gold know,
most investment firms, whether foreign or domestic, know (ask Paulson),
and many “small time” investors in gold know.

Those Who Don’t Know:
Those who don’t know are the masses, and those who are too lazy to search the Internet for hundreds, nay thousands of articles which contain the proof. A good place to start is the weekly (albeit fraudulent) COMEX Commitment of Traders’ (COT) reports. A great source of literally thousands of commentaries with factual data (e.g. 20 year old FED meeting minutes, etc.) that proves there’s been FED manipulation of the gold prices, dating back to the 1960s, can be found at GATA (www.gata.org/).

**** gets off of soap-box ****

@obewon => For the few readers on this blog who may not know, one of the primary reasons why governments & their Wall St. “agents” criminalize gold (& silver) is because they fear it; but gold “tells the truth” about the fundamentals of an economy.

Here here! Excellent way to say it.

I just listened to the latest interview with Marc Faber available on Eric Kings site (kingworldnews) and it’s especially good. I’m a big fan of Faber, and i gather most readers here are also. Marc tells it like is, doesn’t embellish the facts, (except on rare occasions when he’s into his cups lol, like the 2am Bloomberg interview). Anyway, this interview is particularly outstanding. I would urge anyone interested in PM’s to listen to it.

I have been trying to balance my portfolio, i guess like everyone, and i was comforted to hear his advice is about what i have been trying for (plus commodities). He’s saying 25%/25%/25%/25% RE, Equities, short term corp bonds and cash, and PM. BUT, i notice he doesn’t mention commodities. I think that was a slip up? (For anyone who listened to the interview, what do you think? the comment starts at 13:50 min.) I am seriously vested in oil also, thru Cdn juniors, (in equities). I’m just looking at gold miners now, trying to figure them out.

obewon, is there any significance in the difference between “JPM manipulating the market” and your statement that “there’s been FED manipulation of the gold market since the 1960s”? Are JPM and the FED indistinguishable in this matter of manipulating the silver market? If they are different, your answer doesn’t seem to be responding to my comment about JPM and not the FED.

@ James M:
Eric King often has very, very savvy guys on his interview list; Marc Faber, Eric Sprott, James Rogers, Jim Rickards, to name a few.
I’m very surprised that in the Marc Faber interview, he didn’t explicitly mention commodities, because I’ve followed Faber since 1990, and I know how he thinks “commodities” always. So it’s most likely an oversight, but I’ll watch that interview you referenced.
You really can not afford to be ignoring the gold and silver mining stocks, since they act as multipliers of whatever the PM prices are doing. They move up sharply when the PM prices go up, and they drop sharply when the PM prices get hit.

@John Mark:
There’s no significant difference between JPM, GS, and the FED, since JPM is the FED’s “agent” and since collectively, GS and JPM control the government’s every move. The FED pays those firms to “do their dirty work” (e.g. whether it’s gold/silver price suppression, or trashing the Russian Ruble, or undermining some foreign country).

Thanks Obewon for the advice. That’s kinda what i’ve been telling myself. Sometimes it takes a 3rd person voice. I’m just trying to pick now. Downshifting bonds ETF, Miner dividends seem competitive with oil. It comes down to growth. I like MAI from what i see, and Arg looks like a good place to be.

@ James M:
Here’s some more “food for thought”; three items of interest for you.

First: Please recognize that the FED uses JPM as their conduit to short the precious metals markets and also specific currency markets. While JPM shorts gold & silver (a little bit) almost every day, they’ve been shorting it massively almost every 3 months or so. I’ve monitor their “net short” positions every week (they’ve risen steadily since last summer), and noticed that they are probably “overdue” to start another big short cycle (e.g. drive it down about 6% or 7%). Coupled with that possibility is the fact that there are strong rumors that the FED may soon shift their policy and raise interest rates. Go here for info:
http://www.caseyresearch.com/cwc/casey-report-s-david-galland-major-policy-shift-ahead
The counter-argument here are rumors that the FED may “re-evaluate the the gold price” (it’s still officially at $42 or so) in order to prevent the USD from falling like a rock; if true, that action would support the USD, but would propel the gold price upwards. Go here for info: http://www.zerohedge.com/article/surprising-observations-trimtabs-are-central-bankers-loading-gold

Second: Gold and Silver Mining Stocks: Rather than identifying specific mining stocks, I strongly believe that the very best monthly periodical subscription on gold and silver investing is at Casey Research. For a very modest price of $79 bucks per year, you get very specific recommendations, as well as access to all the Casey archives. Go here for info:
http://www.caseyresearch.com/
Their second periodical, called the monthly “Casey Report”, is an excellent one to gain a good, global perspective on the “big picture”. I apologize if this sounds like I’m selling, but I’ve tried many different subscription services (some of which were several thousands of USD per year!), yet none of them come close to CaseyResearch.

Third: Is Silver in a Bubble?
One of the very best and most rational commentaries I read recently about silver investing is from Jeff Clark (also from CaseyResearch!), who penned an article entitled “Is Silver Getting Too Popular?”. Go here for info:
http://www.caseyresearch.com/editorial.php?page=articles/silver-getting-too-popular-right&ppref=DLC209ED0411A

Good luck!

@ Obewon,
Thanks Obewon for the advice and for sharing the info. I will follow up with Casey’s Research. So many avenues for info, so little time, word-of-mouth recommends are helpful in the extreme sometimes. The JPM morgan situ makes sense. The hand behind curtain is dealing in confidence, and wheeling in it.

I went thru March looking for the JP correction, it never came. I think they are fighting a losing battle unless they wielding lots of paper silver, which seems to be the case. Shorts that are covered later. G-leverag.

The only issue on the table there is is the future value of USD, because the metal is reflecting it, that plus the premium of speculation…add whatever you add; in gold that is. Silver is a derivative of gold pricing, until which time as it isn’t. At that time, it has it own story. Will we see that story? Probably.

That’s my take on silver.

@James M:

you’re most welcome.

Since I’m retired, one of my goals in life is to help inform others of the truth, which is often in sharp contrast to the propaganda promulgated by governments and their news media.

Hello, This Don’t sell your silver says Jim Rogers ArabianMoney article above is so cool can someone reply to tell me if you got a RSS Feed

Ed Note: Yes we have an RSS feed.