XMFSinchiruna (28.57)

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#1) On March 24, 2008 at 10:47 PM, XMFSinchiruna (28.57) wrote:

http://www.financialsense.com/fsu/editorials/optimist/2008/0324.html

Buying Silver When There is None Left to Buyby Jim Otis, the Optimist | March 24, 2008

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Did I say that?

Some people with less class than the Optimist might worry that because the precious metals markets plunged just a week after I published my commentary saying I was taking some profits, I would chortle “I told you so! I told you so!!!” Fear not. That type of grandiose bragging is not my style, and I have no intention of saying what I just said. Also, I like to keep the quality of my work on a higher and more erudite level. Also, I managed to sell only a small fraction of my portfolio on Friday, 3/14. My firm plan was to sell higher percentages into the projected sharply rising prices during the week of 3/17. Whoops! Robert Burns said it well: The best laid schemes o' mice an' men gang aft agley'!

Opportunity found

Oh well, at least I had some spare fiat FRNs from the portion of my portfolio that I did sell before the deluge last week. When life gives you lemons, make some lemonade, right? What could be better last Thursday than to buy some silver at less than $17 per ounce? Just a few days earlier, silver was more than $21, so by Thursday it was trading at almost a 20% discount! What better time could there be to convert depreciating fiat paper into real, beautiful, solid, dependable, and best of all, now cheap physical silver! With joyful anticipation, I logged into the website of my favorite dealer, and I tried to fill my shopping cart with silver.

Some shining opportunities are only a mirage

There was an unusual problem with putting the dealer’s silver into my shopping cart, so I figured the Internet messed up again. Fortunately it takes only a few seconds to call my dealer on the phone and have them lock in prices for me. So I called the phone number, but I must have misdialed because I got a busy signal. I double checked the number and called again. And again. And again. Busy. Busy! Busy!!! Fortunately I am as persistent as I am optimistic so I kept calling, and finally the phone rang. After an unusually long time on hold, the dealer answered and asked how he could help me. Still irritated at the earlier difficulties with placing my order, I blurted “I want to buy some metal.”

“Great!” he said.

“How much gold do you want, and how would you like it?”

“I always buy silver!” I snapped back at him. “How much silver do you have in each type!”

“Sorry”, he apologized. “We sold the last of our silver yesterday, and we have not yet been able to replace it. We do have a good selection of gold to choose from. Unfortunately, we are really busy right now, so I can’t tie-up the phone line to talk. Tell me what gold you want and we will ship it out to you.”

In retrospect, I may have been a little rude, but I was still irritated and I was a little abrupt. I couldn’t believe that he was refusing to sell his silver to a good customer. I thought about telling him that I am the one and only, world famous and highly influential, Optimist so he would change his mind and give me his business, but I decided I was too angry to explain his inevitable remarks about why I would call myself an optimist, and who could be optimistic while prices were plunging, and he never heard such nonsense before, so I just let the whole thing slide with only a lame “Goodbye.” If that dealer didn’t want to sell silver to me, I would just buy it from someone else!

Paper prices do not real physical silver make

With similar delays in getting connected, several other dealers told me essentially the same thing. They had enough gold to sell to me, but almost no silver. A few other dealers did have a little silver left for sale, but selections and quantities were limited and their prices were significantly higher than the current spot price which is determined in a tag team effort by COMEX futures and SLV. I learned that the U.S. Mint temporarily(?) stopped making Silver American Eagles. It slowly became clear to me that the supply chain which feeds silver to dealers so they can sell to the public was strained, and there was a serious deficiency in availability of silver that the public could purchase.

Fortunately there was still an abundance of silver being sold on eBay, so I scoped out the auctions I wanted to bid on. I input the spot price into my homemade spreadsheet so it can apply the usual premium and tell me how high to bid. Most of the auctions ending soon were already significantly more expensive than the amount I calculated for my maximum bids, so I placed bids instead on many that would sell later in the weekend. “Sorry, but you have been outbid,” was the repeated message I saw. The eBay bottom line was that one had to bid almost as high with spot silver quoted at $17 as would have been needed to win comparable auctions the week earlier with spot silver at $21!

The sharp price plunge in silver last week caused very high demand which overwhelmed the limited supply of real physical metal and resulted in a temporary lack of silver that could be purchased by the public. It became clear that the price of COMEX futures and the SLV ETF only sets the spot price of paper, and influences the prices of silver mining stocks, but it cannot supply the silver needed to meet the high demand for the real thing. As the price of silver rises over the next few weeks, hopefully demand will subside and supply will increase so that we can buy real silver once again. I strongly encourage readers to take advantage of that opportunity to own more silver. Don’t forget to safely store your precious metal in a secure place where you can get to it without the permission or the assistance of anyone else.

The silver phoenix will rise again

So, is last week the start of the predictable summer slump? I am going to climb out on a limb and guess that we will look back on last week and think of it as little more than another example of rising volatility in precious metals prices. I am hopeful that the prices of silver and gold will rise again without serious interruption to new highs by May. As previously promised, I plan to sell as much as a quarter of my portfolio into that rise.

For the benefit of other amateur Elliott wave people, I am guessing that the sharp sell off last week was a short but not sweet fourth part of wave 3. If that guess is right, I hope the fifth part will be almost a replay of the first part which increased the price of silver by $4.70 over a timeframe of 12 weeks. Adding $4.70 to the $16.80 low last week, in a timeframe of 10 to 12 weeks, points to approximately $21.70 or more in early to mid May. After that, fifth waves have the Energizer Bunny ability to keep on extending, and extending, and. . . By sometime in May, I expect a large lady to start singing about the end of wave 3 and I will be satisfied that I sold some before May and went away. The music has stopped for the precious metals cakewalk each summer since 2001, and I have no reason to expect this year to change that pattern. If we do get a sell off in May , I hope to find a reasonable spot in that likely two month long wave 4 to buy back the mining shares that I plan to sell into the rising prices in April.

How can you buy real silver when there is none left to buy??

If my best laid plans for the next month do not gang aft agley again, I hope to also have some surplus profits from selling in April and going away by May. The projected profits are already (and hopefully not too prematurely!) earmarked for purchasing additional real silver. So, just like last week, I hope for silver prices to drop sharply sometime in May so I can buy lots of silver at bargain basement low prices! What a great plan!! Just like last week!!! But wait a second. Last week, sharply lower silver prices caused very high demand for a limited supply of silver, with the predictable result that I was not able to buy silver at the sharply lower prices. I do not want to be stuck holding a surplus of fiat FRNs earning 1% annual interest (before taxes!) while real inflation is destroying the value of those FRNS at a double digit rate. What to do?

I got it! I’ll call my friendly dealer and ask him to pretty please set aside a bunch of very valuable silver, and not to sell it to anyone else no matter that they are willing to pay a premium to buy it, until we agree on a low sale price at the spot price when I call him sometime in May, and then to hold it for me until I mail him a check sometime in June. Hopefully, none of my readers will be surprised when the dealer responds: “In God we trust. All others pay for silver in advance!”

My dilemma is that I want to buy silver when prices are low, but high demand and supply constraints make it impossible to buy at low prices when everyone else wants to buy. The solution to that dilemma is easy by using the Optimist’s version of physical futures! Decide soon about how much silver you will want to buy at hopefully sharply lower prices later this summer. Then buy that silver in April or May when rising prices reduce demand and increase supply so there is an ample selection to choose from. Call your favorite dealer, lock in your purchase details at the then current spot price (which will be higher than you want to pay), and pay for your purchase as you normally would. At nearly the same time as your call to buy silver from the dealer, use a stock account (which you previously established and funded so you can buy and sell the SLV ETF) to sell a corresponding value of SLV. At that time, you go long real physical silver and short the same value of SLV, with both at the then current spot price of silver. The net result of that pair of transactions is that you will be neither long nor short silver because the subsequent gains (or losses) on the silver will be exactly balanced by the equivalent losses (or gains) in the corresponding short SLV paper trade.

Since the dealer will be busy shipping silver coins or bars to you, this is different than the traditional paper spread transactions you might do in a financial market. Even though you will neither gain nor lose net value while you have the silver the dealer will send to you, and have the comparable short position in SLV, you will have effectively entered into a contract to buy the silver (that the dealer is busily sending to you) at some time and price in the future. You then “complete” the contract by simply buying back the SLV you previously sold short whenever the spot price of silver reaches the level at which you want to purchase the silver (that you have likely already received from the dealer). When you buy the SLV to close your short position, you will effectively buy your silver from yourself!

Example 1 – buy real silver first

Let’s run through an example to see how it could work. Let's assume that on Friday April 18, the spot silver price is relatively steady and will close at $20, and that SLV is still trading but will close very close to $200 (because one share of SLV is equal to 10 ounces of silver). With your tax return already completed so that you are sure you have sufficient funds to complete both sides of the Optimist physical futures trade, and having already confirmed that dealers have an ample quantity and selection of silver, and with your stock account already activated and fully funded so that you can sell SLV short, you are ready to roll.

Decide how much silver you want to buy (and that you can afford to fully pay for). Suppose, for simplicity in this example, you decide to purchase 100 ounces of silver. It will not matter yet whether you want one 100 ounce bar, or ten 10 ounce bars, or a hundred 1 ounce rounds or bars, or any combination that adds to a total of 100 ounces. Use your stock account to sell short 10 shares of SLV at our assumed current spot price of 200 per share. If SLV and the spot price of silver are still trading, you would quickly contact your dealer to lock in the price of the physical silver and commit to purchase 100 ounces of real physical silver in whatever form you prefer. If you time your sale of SLV to be almost at the Friday close so that the price of silver will be fixed for the weekend, you can take most of the weekend to shop around among dealers for the best deal to get the 100 ounces of silver at closest to spot price. After you lock in your silver purchase, send payment to the dealer and have him proceed to deliver the silver to you.

You are now fully hedged by being "long" the 100 ounces of silver the dealer is shipping to you, and short the same value with the SLV trade in your stock account. If the price later increases and you decide to close the position at a higher price of silver, you will lose money on the short SLV, but you will gain the same amount of equity by having paid the dealer less by the same amount. If the price later decreases instead, and you decide to close the position at a lower price of silver, you will gain "profits" on the short SLV, but you will lose the same amount of equity by having paid the dealer more by the same amount. Either way, the net will be the same*** as if you had purchased the physical from the dealer at the price that you paid to buy back the SLV to close the short position. You will have the 100 ounces of silver the dealer shipped to you, and your net payment will be the same*** as the price at which you later bought the SLV.

***The fine print: In addition to the premium and shipping costs that the dealer will charge for the silver, there will also be additional transaction costs and tax consequences and funding issues including settlement times related to selling and buying the SLV. Kids, do not try this at home until you are a trained professional who has mastered all the details related to this type of brokerage selling and buying activity. A good rule of thumb is to avoid playing in any game that you do not know all the rules about.

I call this physical futures because it is analogous to buying a COMEX futures contract (at full price. Never use leverage!!!), and then taking delivery later. The similarity is that you can decide on what silver you want to buy when there is an ample selection to choose among. An advantage is that you “take delivery” from yourself at the time you buy back the SLV short leg, because you would have already received the real silver the dealer sent to you. A big disadvantage is that it is necessary to both pay the dealer for the silver, and also to fund the stock account in which you will short the corresponding SLV, so this approach will require a double amount of capital for the duration of the SLV short position.

Does an Optimist or a Pessimist plan for lower prices??

Perhaps you think I am too pessimistic in expecting (or too optimistic in hoping for??) lower prices this summer, and you prefer to lock in your purchase of silver now, immediately, as in really right now! Sorry, as I patiently explained a few thousand words ago, there is precious little real physical silver left in the supply pipeline to buy at the current prices which are sharply reduced from the previous week. You will be happy to know, however, that the Optimist’s physical futures can solve your problem too. Don’t waste the bandwidth to talk to your dealer first, because his shelves are still empty. Simply buy the corresponding number of SLV shares when they are at the spot price that you wish your dealer would sell real physical silver to you. Then wait impatiently until the spot price of silver moves higher, and thereby proves that your investing timing is much better than mine. As the price of silver continues to increase, the higher prices will work to reduce demand so the supply pipeline can refill the dealer’s stock and increase his inventory. At any time that your dealer has in stock the variety and quantity of real silver that you wanted when you bought SLV instead, then complete the purchase of silver from the dealer, and at the same time sell the SLV that you previously purchased. It will not matter what the spot price is when you complete the purchase of real silver from the dealer because the net will be adjusted by the companion sale of SLV at the same time and spot price.

Example 2 – it is easier to buy paper first

As an example of this type of trade, assume that you decide one day that you want to buy 180 ounces of silver at the price paper silver is then trading at, but the dealer is temporarily out of stock again. You would be happy to pay the current spot price to buy the metal, but there is no available source to get it from. You could instead purchase 18 shares of SLV in your brokerage account when silver is trading at the spot price that you would be willing to purchase the metal instead. There is no need to call your dealer again for now, and he will be happy to have a few moments of silence between angry exchanges with other disappointed buyers. Days, or weeks, or even months later, the dealer may again have in stock silver you wanted to buy when you bought the SLV instead. The price of the silver will certainly be different than the price you paid for the SLV, but ignore that for now. Sell the 18 shares of SLV during the trading day, and quickly lock in the purchase of silver from your dealer at the same spot price as the SLV sale.

If the spot price at which you bought the silver from the dealer is higher (or lower) than the price you previously paid to buy the SLV, then you will gain (or lose) the same*** difference from the SLV, so the net is that you get to buy real physical silver at a later date, but at the earlier spot price when you bought the SLV but really wanted to buy the silver instead.

***The fine print: In addition to the premium and shipping costs that the dealer will charge for the silver, there will also be additional transaction costs and tax consequences and funding issues including settlement times related to buying and selling the SLV. Kids, do not try this at home until you are a trained professional who has mastered all the details related to this type of brokerage buying and selling activity. A good rule of thumb is to avoid playing in any game that you do not know all the rules about.

As will be further discussed below, this example in which you buy paper SLV first with the plan to buy real silver later is different than the previous example in which you bought the silver first, and closed out a paper SLV short position later to complete the silver purchase. The key difference is that buying paper SLV first only protects your subsequent purchase of silver if there is real silver available that you can buy later.

Using this approach, you can buy as much silver as you want, at the same*** price you pay for the SLV you bought first (plus whatever premium your favorite form of silver adds to the cost, plus the additional transaction costs related to the SLV). You can begin that process whenever you want to purchase the SLV, regardless of the availability of silver at your favorite dealer. You lock in the purchase price when you purchase the SLV, and you complete the process when the dealer has the real physical silver that you want.

Sweet! You get the silver that you want (but that will not be available until later), and you get to pick the price you want to pay (by deciding when and at what price to purchase the SLV). How could anything be better?

but paper is NOT silver!

The above idea of purchasing SLV first to lock in the current price, and then getting the silver you want later when your dealer has an abundance will probably work out OK. Maybe! There is a risk that you need to be aware of. Let me illustrate that risk with an example. Suppose you married in 1985, and you want to mark your 2010 Silver anniversary by giving your loving husband a sealed Monster box of 200 Silver American Eagles dated 2010. Having read some of the Optimist’s earlier work, you reasonably think that the price of silver should be higher by then than it is now, so you would really like to buy the 2010 Monster Box now at current prices. “Simple,” you now say, “and thanks Optimist for the tip about physical futures.” Just buy 50 shares of SLV at today’s price, and then sell the SLV in two years when the 2010 Monster Boxes are available to purchase. That sounds like good plan, until you realize the implied assumption that there will be real physical silver that you can buy in 2010. The fact is, however, that there is an enormous short position in paper silver, and the supply problem over the last week proves that there is not a surplus of capacity in the supply of silver to the market. Manufacturers who use silver in their production will likely see the supply problems of last week as a warning shot across their bow. Their just in time mode of acquiring the raw materials for their business cannot tolerate significant disruptions in the availability of the supply they need, regardless of how cheap the paper price may be. Imagine Kodak advertising that their color and black & white film got cheaper with the drop in silver prices last week, but they can’t get enough real silver to continue manufacturing, so they have no film to sell at any price. At some point, Kodak will likely decide that they should insure their continued operation by having more silver in their warehouse than the just in time model would predict. Now multiply that decision by millions around the world, and quickly the amount of silver in the supply pipeline will obviously be insufficient. When that realization triggers panic accumulations by manufacturers who must have real physical silver to stay in business, the futures market will lock into a delivery only mode with everyone demanding to buy but no one willing to sell, the paper shorts will be unable to deliver, and real silver will be impossible to obtain.

If you plan to wait to get silver until you see the signs that the silver market is beginning to lock up, then I recommend that you stay awake at nights, because the entire tsunami could start in Asia while the USA is asleep, and be essentially over in Europe before most of us wake up. Silver that was cheap when you went to sleep may unavailable at any price by the time you wake up in the morning.

For those lovely ladies who want to get silver for their husbands, don’t delay while waiting for your favorite form of silver to become more available. This Optimist strongly recommends that you get whatever real physical silver is available as soon as you have the fiat FRNs to buy it with. Cheers!

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#2) On March 25, 2008 at 10:38 AM, XMFSinchiruna (28.57) wrote:

http://seekingalpha.com/article/69687-looks-like-there-s-a-silver-shortage?source=yahoo

Worried by the steep correction in silver? Don't worry, just reduce your leverage.

Silver has always corrected by roughly a third after its sharp ascents in the past 5 years. This is due to the extreme tightness of this market where a billion of whatever fiat currency still can do a lot of damage. At one point the short sellers will be run over by the very real freight train of exploding physical demand that has led to what looks like a worldwide shortage in bullion.

GRAPH: Silver always corrected by a third in the runups of the past 5 years. I would not rule out a similar development this time before silver will attack the $30 mark on its way to the old high at $50. Chart courtesy of Kitco.com

The US Mint has been out of the gold sale business for almost half a year now, filling orders on very few days since September. Currently only the new 2008 gold proof Eagles are on offer. All uncirculated bullion coins are not available. Platinum coins have not been available in a while too.

Now the physical delivery problems spread to silver as well. The US Mint says it will ship silver eagles again after April 9. But taking it from past experience, this schedule may be delayed again.

Jason Hommel, probably the most outspoken silver bull for a lot of reasons -but not all - I agree with, has compiled a story of real life experiences when trying to buy silver bullion.

From his report:

Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex. This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out. Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto.

Hommel concludes that the latest correction is a matter of price fixing.

This is unprecedented, and is a perfect case of market manipulation in the paper market at COMEX and other futures exchanges to see silver prices continue to drop down to below $17/oz. today. Paper promises can be created endlessly, but real silver cannot.

 

This is NOT a case of the dealers getting spooked, and selling out to the refiners just in time, at peak prices. This is a case of the public buying up the stock at coin shops across the world ever since gold hit $1000/oz.. That event finally sparked a little of the public's buying of silver and gold. Thus, the typical coin shop flow of silver to the refiners just stopped in the last few weeks, and especially the last two days.

This is NOT a case of the public creating a top with 'everyone' in silver, because nobody's in silver yet. In 2006, only $1 billion was spent on investment silver, which is 0.007% of the $13.5 trillion of money in the banks. As I have long reported, the silver market is so small, there is no room for new investor demand, not even 0.1% of money could be spent on silver, because that would be $13 billion, which would push silver prices to $200/oz., and we are seeing only the tiniest beginnings of that.

$13 billion would be almost enough to buy all the silver produced by the mines in one year, which would leave nothing for industry. It would essentially double demand, but supply would remain the same.

Furthermore, this is not a top because the public continues to get to the coin shops, and is now getting on waiting lists for silver. The public is not yet in, so how can the price drop?

This is a case of price fixing and manipulation, like communism. Sausage is reported to cost 1 ruble per link (editor: corrected), but there is no sausage. Silver price is quoted, but there is little to no silver.

Shortages are evidence of price fixing. Price fixing results in shortages. They are price fixing silver at a below market price over on the paper exchanges in New York and around the world.

Also check out the highly interesting comments on his story.

This blog reported last September that silver and gold bullion trade 10% to 15% higher in China.

To add my 2 cents on silver shortages I can fill in a little from the German speaking parts of Europe. ebay has offered the most liquid market for silver here, whose investment appeal is greatly diminished by 19% (Germany) and 20% (Austria) VAT and high mark ups of 16% for kilo bars from professional dealers.

1 kilo, worth €€354 at a "global" spot price of $17, would sell for €€481 including all punitive taxes, not considering shipping.

Nevertheless the 3 highest bids on ebay are €€516, €€491 and €€490 for a 1 kilo bar at the time of writing.

I also note that all multi-kilo offers from professional sellers have entirely disappeared for several weeks/months and that there are many new offering hands in this market which I consider the true silver market as these are actual exchanges of fiat money against bullion.

At the same time the new 1 oz silver Philharmonic has seen huge demand in Austria, despite even higher markups.

I also remember very well that prices on ebay stayed up when silver traded to $15 in early 2006 and then crashed to $10 in a similarly brutal move as we have experienced it this week. This correction was not entirely reflected in ebay prices then.

And here some more facts about delays in silver shipments:

Kitco states on its website,

IMPORTANT: Due to the volatility of the market, we are experiencing a significant increase in the volume of shipments going out. Although Kitco and our depositories are working hard to stay on top of this, you may experience a delay in your order being processed by our vault, and sent out to you. We apologize for any inconvenience this may cause, and appreciate your patience and understanding.

If you are impatient for more silver bullion, Apmex cannot help you either, reports Boom2Bust.com:

Due to the OVERWHELMING demand for precious metals, our online ordering system has been unable to keep up with our customers’ needs. We have had to disable the APMEX ordering system to allow us ample time to upgrade our site to accommodate the increased demand. We apologize for this temporary problem. In the mean time, we will be accepting telephone orders for the following items only as we have them available:
• 1 ounce Gold American Eagles
• 1 ounce Gold Canadian Maple Leafs
• 1 Ounce Gold Krugerrands
• 100 oz Silver Bars
• Misc Generic .999 Fine Silver
• 90% Coin Silver
During this time, we will have a minimum order of $5,000. We regret we have had to make this drastic change to our ordering process and rest assured, we are working expeditiously to correct the problem.

I conclude to buy more silver. Having to overcome a premium of 36% in Austria, I am anyway in for the very long term. The inflation-adjusted record high for silver now stands at more than $135 per ounce. Meet you there.

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#3) On March 27, 2008 at 11:44 AM, XMFSinchiruna (28.57) wrote:

Here's the latest from Jason Hommel.  I know he is given to overly-dramatic rants, and I REALLY wish he would keep the religious element out of his rantings, I post this because depite his shortcomings, he has been a public figure in the silver world for some time and has managed to attract quite a following without completely discrediting himself. I believe the core information he provides to be legitimate, and if for nothing else, read thispost for the e-mails that were sent to Jason... for therein lies a sufficient story to bolster the evidence of an emerging acute shortage in physical silver... worldwide.

 http://news.silverseek.com/GoldIsMoney/1206572052.php 

 

Perth Mint and Kitco Scheme Exposed

By: Jason Hommel, Silver Stock Report

(What's going on here?!)Silver Stock Report

Yesterday, I got into a bit of trouble by writing that the NorthWest Territorial mint was bankrupt, which they are not (consider this a second retraction).  The NorthWest Territorial mint only has a risk of bankruptcy since they have so much silver owed to them by their suppliers, and those risks concern me in light of shortages of silver reported everywhere, and their long delivery times.

What is going on with Perth and Kitco is very unfortunate, since the Perth Mint is reportedly one of the largest bullion dealers in all of Asia, and Kitco has the largest presence on the internet, ranking number two in the search terms for silver and gold, just behind wikipedia.

So I have to choose my words carefully regarding the Perth Mint & Kitco.  Perhaps the words of Jesus and Andrew Jackson are appropriate to quote in this context:

"You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning." --Andrew Jackson, 1828

Matthew 23:33  "You snakes! You brood of vipers! How will you escape being condemned to hell? 34  Therefore I am sending you prophets and wise men and teachers. Some of them you will kill and crucify; others you will flog in your synagogues and pursue from town to town.

You know who Jesus and Andrew Jackson were addressing?  The moneylenders who offer to hold your money for you!

Since I advocate that you hold your own bullion yourself, I've wondered if the business practices of Kitco gave them a bias to rarely ever publish my articles, even though I was an advertiser for years, and my articles appeared far more regularly at gold-eagle.com and goldseek.com.  I think I finally figured it out, and it's time for me to finally burn my bridge to kitco; as I don't need them anyway, and stopped advertising with them a while ago.

Kitco is a partner in a bullion certificate scheme with the Perth Mint, and also offers a pool account like Perth Mint does. 
https://online.kitco.com/pmcp/

I believe, but cannnot prove, that Kitco is short of bullion owed to their own customers in their pool account, and this would explain why they publish the anti-gold articles that they do.  If you own precious metal in a pool account or certificate form with anyone, Kitco, Perth, Monex, Goldline, any Major Bank or Brokerage, or anyone else, I think you would be wise to cash out, and get real silver somewhere else, even if you have to pay extra fees to do so.

Here are my five witnesses in my case against the Perth Mint (Kitco is implicated only by association, as they advertise the Perth certificates.)

The testimony of the people below go to show that you cannot trust silver certificates, nor can you trust allocated silver storage, nor can you trust government guarantees.  (Trusting government guarantees for bullion is the most absurd thing I can think of, since governments are the ones who are printing money which competes with the demand for silver as money!)

=============

Date: Thu, 28 Feb 2008 18:52:05
Subject: Re: Silver Stock Report: How to Get Into Silver, for Billionaires

S Tabikh wrote:

Jason,
        
Ive just ordered $20k worth of Silver 100oz bullion from the Perth Mint and have to wait upto 6 months for delivery for such a small order. Goes to show the lack of Silver avaliable.
        
Regards,
Shafic

=============

Date: Thu, 28 Feb 2008 15:07:40
Subject: Re: How to get into Silver for Billionaires

peter wrote:

    Hi Jason,

    Thanks for sending me your latest email, I'm always interested in hearing your opinion of the current state of the Silver market.

    I was rather alarmed, however, to read the story of the gentleman you mentioned who had 10,000 ozs of allocated Silver stored on his behalf by a "AAA rated,... guaranteed "  mint which "services the Asian market" ...I assume you are unable to publicly identify the mint concerned for legal and other reasons, but I would greatly appreciate it if you could inform me privately of same. IE: Is it the Perth Mint?

    The reason I ask, as you can probably guess, is that my own situation is almost identical to the one mentioned in your article (which listed difficulty getting allocated silver which took 6 months) and you have now further aroused my suspicions about the alleged security of allocated storage of precious metals. In addition, I have also met with an un co-operative attitude when making enquiries about taking delivery of my Silver, so again there are further parallels with your story.

    I hope you can take a moment from your busy schedule to share this information with me as obviously, its vitally important to my future financial security -just a simple 'yes' or 'no'  in answer to my query above would suffice, no need to elaborate.

    Thanks again for your time and I wish you every success in spreading the Story of Silver to the world.

    Regards,
    Peter

Jason: YES!  I was alluding to the Perth Mint, but I didn't have enough testomony at the time to name them publically, but now the truth comes out!  Get your silver.  Travel to their location, and get it, and haul it away, as soon as possible.  (They might not have it!)

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3/19/2008 9:20 PM
Jason,

Just placed another order with Perth Mint, they are out of stock on everything, however there waiting period is no longer 6 months (Im guessing they received alot of complaints) its now 6-8 weeks.

Just got off the phone with them, they have no bullion in stock, its all on backorder, the official excuse is that it takes along time to make the bars and everyone wants them, could be viiewed as a good thing knowing demand is high, but I personaly dont like waiting 6-8 weeks for delivery.

I contacted several other dealers in Sydney, only 1 out of 5 has stock...... Everyone has back orders with PM which is the distributor.

Regards,
S

=============

In the March 26th Midas report, from lemetropolecafe.com (a site I subscribe to, and highly recommend):

G'day Bill
The shortage of silver is becoming acute in Australia. I phoned my supplier (THE major in my state) this morning, to confirm the developing situation re supply and he has confirmed that he cant get silver until May. He has always had ample stocks on hand, with my son or myself able to walk in and transact on a cash and carry basis.

NOT ANY MORE!!! He can't get a price from his supplier whom I assume is the Perth Mint or the Australian Bullion Co, as these are the bars that I have received from him. He only does Open Book orders where he will take your order but will not be able to price the metal until he is assured of a delivery price from his suppliers. Mid April is when he expects to be able to price an order. He said he has knowledge of a Perth Mint customer who has his money tied up in their Unallocated Pool Account, using Silver Certificates. Taking the advice of various "hold it in your hot little hands" advocates (such as yourself, Ted Butler and Jason Hommel etc,) he tried to redeem his certificates and have his holdings transferred into an Allocated Account.

The Perth Mint has advised him that they WILL NOT buy his certificates from him and WILL NOT allocate physical silver to him. They will however ALLOW him to swap them for gold. They will only do this by slugging him on the spreads. They slug him on their buy back price for silver and then whack him for their mark up on gold. He apparently is a man on the edge as my dealer feels that he is close to topping himself over the issue. Must be on Margin. I wonder if the Perth Mint is so broke that they can't pay him. Apparently they are backed by the full faith and credit of the Western Australian Govt. Yeah Right!

Stow it or blow it is the right call from you et al, and I thank you dearly for the advice, as I was once a Perth Mint PAPER silver certificate holder.

=============
5:24 AM, March 26th

Hi Jason,
                just wanted to let you know about recent dealing with Perth Mint.
As I have been following your emails now for some time I recently decided to buy silver at Perth Mint in the form of the PMCP (Perth Mint Certificate Program).
 Talking with a person in their Treasury Department I opted for Unallocated silver with the view of changing that to Allocated or pick up at a later stage.
After your email "If you don't hold it, you don't own it" I sent an email saying when I wished to pick it up, giving about 4 weeks notice that I was told I needed to give.
 Still have had no reply after a phone call and another email.

Wondering if you have had any similar emails from anyone else regarding Perth Mint?

God bless,
Graeme.

=============
=============

I've been thinking more about how people who are afraid of risks, and who don't want to pay the costs of storing their own silver, tend to trust promises of men rather than the provision of God.  The Great Harlot of Revelation 17-18, I believe, refers to moneylenders who lend to the kings of the earth to control them; and this is harlotry because the Harlot will trust the kings of the earth for security rather than the King of Kings, Jesus Christ.

So, now, I wonder how much different it is to trust having someone else hold your silver for you; is that an act of spiritual harlotry as well?  Do these people who put their trust in the Perth Mint, guaranteed by a "king", the government of Australia, get what they deserve?  The kings are said to turn on the harlot to destroy her, and I wonder if the Perth Mint not giving out silver that was paid for is like a preview of that prophecy.  You judge. 

As for me, I've long decided to choose to be responsible for taking dominion over God's provision of silver that He has entrusted to me to care for, and I'll accept and take the risks of holding it myself, and I'll trust in God that things will work out ok without man's insurance. 

I know that if I have wealth, then I must also have the wealth to guard it, as that is a basic undeniable truth. 

If you have a small amount of silver, get a lock box.  If you have more, get a floor safe.  If more, get a large gun safe.  If more, get several gun safes.  If more, build a vault.  If more, build a warehouse.

According to God, if you are Christians, you are Kings and Priests, and so, I try to act like it; taking possession and guarding my silver with my own safes, and preaching that others do the same.

Revelation 5:10 And hast made us unto our God kings and priests: and we shall reign on the earth.

The united States is supposed to be a nation of sovereigns, kings, the people are the kings.

Act like a King.  Get your silver.

Act like a Priest.  Tell other people to get their silver.

http://find-your-local-coin-shop.com/

Sincerely,

Jason Hommel
www.silverstockreport.com
www.miningpedia.com

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#4) On March 28, 2008 at 2:36 AM, cluelessmorgan (98.09) wrote:

Good reading.  Bookmarking it for future reference.  Didn't realize someone already posted the financialsense article.  Good stuff that bears repeating though. :)

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#5) On March 28, 2008 at 8:00 AM, XMFSinchiruna (28.57) wrote:

Fascinating Correspondence to the Commodity Futures Trading Commission (CFTC) by Bix Weir of GATA.org

 Date: March 26, 2008
Attn: David Kass, CFTC

Thank you for your latest email response addressing my questions related to the ongoing manipulation of the price of silver on the COMEX/NYMEX. Although your responses are very welcome, I am particularly concerned by your answer to my second question regarding large trader reporting. Here was my question and here was your answer:

Question: If it is true that the large trader reporting is the cornerstone of the CFTC surveillance program, why do you allow 4 or less traders to control 310M+ oz of short positions on the COMEX Silver contract?

Answer: Your “if…then” question is a non sequitur…yes, it is absolutely true that the Commission’s large-trader reporting system is the cornerstone of our market surveillance program. I fail to see what the truth of that statement has to do with the positions held by the four largest traders in any market. Apparently, you are really asking about whether four traders should be permitted to hold net short futures positions in the NYMEX/COMEX silver contract that represent over 300 million ounces of silver. You and some market commentators have long held that traders holding large short futures positions are using those positions to manipulate downward the world silver price. I believe we addressed those concerns at length in the 2004 letter to silver investors [available at http://www.cftc.gov/files/opa/press0...lverletter.pdf] and our continued surveillance of that market has not altered the conclusions reached then.
David Kass
____________

David….
I have been told to reference this 2004 letter from the CFTC dozens of times in email responses as well in conversations with your “expert economists”. To this day if anyone calls the CFTC and asks about the silver manipulation issue they are immediately referred to this letter. One rather helpful economist even went so far as to tell me that when they pull up any silver information on their computers they are prompted to direct any silver manipulation questions to the 2004 letter. THIS HAS BEEN GOING ON FOR FOUR YEARS! I am not going to point out all the flaws and misrepresentations in this letter because most of them were addressed by Ted Butler the week of its release. Those arguments can be found here: http://www.investmentrarities.com/05-17-04.html.
I am not even going to point out that the silver markets have CHANGED DRAMATICALLY since 2004 and recycling the same letter over and over is an insult to all concerned market participants today as well as your “expert” surveillance staff. (for example…have you noticed the short position held by 4 or less traders has grown by 100% since the 2004 letter was written?!).
What I am going to say is “OK. I accept that the 2004 letter from the CFTC is the official CFTC stance on the manipulation issue.”
My question now is “HAVE YOU READ YOUR OWN LETTER?”
CFTC Official Stance On Manipulation http://www.cftc.gov/files/opa/press0...lverletter.pdf

Page 2, Paragraph #1

“What is the CFTC’s response to these allegations?”
“While there has been a production deficit, there has been no supply deficit. Large silver stocks have existed throughout this period, and have been made available as a source of supply at prevailing prices, presumably by many different and independent holders from around the world. This has had a dampening effect on price. There is no evidence, however, that silver futures prices have been distorted relative to cash silver bullion prices, i.e., prices that represent the value of “real” silver.”

STOP THE PRESSES!
Argument #1 in paragraph #1 of the reason why there is no manipulation is that there is no supply deficit and that prices have not been distorted relative to the value of “real silver”.
I’m sure you are aware of where I am going here. Last week the price of silver was slammed down $4 in a matter of days out of the blue after nothing but bullish news about the silver market. The market COT structure was ripe for a collusive downward manipulation and the top commercial traders executed another manipulative slam (the mechanics of which have been shown to the CFTC many times by Ted Butler and others).
But this time THE PHYSICAL SILVER MARKET FROZE UP WITH ALMOST NO SILVER AVAILABLE FOR PURCHASE AT THE LOWER PRICES! Bullion shops throughout the world could not find product to sell at any price. Hundreds of silver dealers and coin shops from around the world have been contacted and almost all are saying the same thing…THERE IS LITTLE OR NO SILVER AVAILABLE! The US Mint stopped issuing Silver Eagles. For some unlucky holders, Perth Mint is rumored to be resisting their promise to convert silver in their “pooled accounts” into bullion. For those bullion dealers that ventured to sell product the wait times were extended exponentially. This is what we have been warning you about for over 20 years! The huge drop in prices was accompanied by the disappearance of physical silver for the average investor. This is obviously contrary to any idea of a properly functioning market.

Since I know the CFTC traditionally responds to my questions and issues by trying to counter my points in support of the 4 largest traders, I would like to list the facts and I would like a CFTC response to these facts as they relate to silver price manipulation.
1) The $4 drop in the price of silver was directly in contrast to the availability of physical silver for the majority of market participants. Please explain why the CFTC believes this is a normal market occurrence in line with the physical market dynamics.
2) The silver supply shortage that exists today clearly exposed the manipulative nature of the 310M+ oz short position. Why is it allowed exist and why is it allowed to grow?
3) The CFTC’s 2004 letter concerning the manipulation of silver states as its main argument that the reason there is no manipulation by the few large silver shorts is that there is no supply deficit. Now that the silver shortage is very apparent around the world, what is being done to stop the manipulation of the price of silver due to the silver shortage?
4) With thousands of complaints filed with the CFTC regarding silver manipulation, why wasn’t the CFTC able to preemptively stop the serious silver shortage that is now clearly deterring silver investors from obtaining physical metal at today’s “below market” manipulated prices? What is being done to make sure that the majority of physical silver purchasers are not locked out of the market ever again?
5) Now that the silver shortage has appeared in force, why doesn’t the CFTC act to ensure that the true price of silver is being reflected by the silver market? Obviously, this would entail removing the price suppressing 4 largest shorts from their position just as the CFTC did in the 1980’s when the Hunt Brothers long position on the COMEX was deemed as manipulating the price higher. Yes, it would disrupt the market but why was this market clearing maneuver ok for ending a long manipulation but not for ending a short manipulation?
6) The 170M oz SLV silver inventories were not purchased prior to the CFTC letter in 2004 and have clearly removed a large amount of silver from the available supplies. Since these silver inventories are no longer available, how can the CFTC justify that the 310M oz short position by the 4 or less traders does not have a suppressive influence on the price of silver?
7) In 2004 when the CFTC letter was written the manipulative short position was only 50% or where it stands today. Does the CFTC plan on continuing to rely on the 2004 letter as their explanation of silver market manipulation or do you think it is time for a new look at the silver market dynamics?

Speaking for tens of thousands of silver investors and free market advocates around the world, it is time for the CFTC to end the silver price manipulation.

You told us what your definition of manipulation is.

Now do your job and end it.
Bix Weir

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#6) On October 15, 2009 at 8:58 PM, niceguytom10 (< 20) wrote:

you can also check these gold auctions out.  they have forums and forex too.

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