-- Posted Wednesday, 17 September 2008 | Digg This Article
| Source: GoldSeek.com
There have been several highly visible clues that accepting paper promises from some of the leading financial counterparties in the US may be lethal to your financial health. If you have any common sense at all you have to recognize that the official pricing of gold and silver that is accepted in the industry is a complete farce. With COMEX silver currently trading at $10.44 per ounce you can not buy physical silver any where near that price. Silver bars are trading more than $3 higher than that price and the best price I have seen for junk silver bags is close to $2 over that price. There is a real shortage of silver moving to refiners. Bill Murphy of GATA on Friday spoke about a recycler offered $16 per ounce after deciding to sit on his product after seeing the low spot price on the COMEX which deals are settled at. Bullion dealers are constantly sold out and can sell product that walks in the door before the seller even leaves the premises at way over spot. Some dealers are even getting $20 - $25 per one ounce coin with the quoted spot price at $10 and change.
The biggest tipoff that totally nefarious activities are taking place in gold and silver is regarding their reaction to news. When it became apparent that Lehman was going bankrupt and then Merrill Lynch and AIG were in dubious condition the Asian markets experienced mini-crashes with many stock markets off 6-9% over night. With this news we then saw gold opening down the following morning. That just simply does not happen in a free market. Maybe the gold stocks could be caught in a downdraft due to all equities being sold but if you believe gold would be down in that scenario then you probably are also a big buyer of swampland real estate. We saw Bear Stearns go down in March with tax payer money being put on the line and gold went down. In July we saw Fannie and Freddie go under and again gold went down. Last week we find that taxpayers have now been volunteered to backstop Fannie and Freddie which first was estimated to be a $25 billion hit which will in reality be a multi trillion dollar hit. Hold on to your shorts…. the dollar goes up on that news. Come on. Are investors really that stupid? Now we have our largest and oldest financial institutions dropping at the rate of one per day and people somehow still feel secure letting these financial institutions hold their gold and silver for them either in custody or through the GLD and SLV ETFS. You’ve got to be kidding! Morgan Stanley defended itself for charging storage of gold and silver which it admitted that it did not have and their defense was that it is an accepted industry practice. Hello? Is there any intelligent life out there? AIG needed $20 billion to remain solvent on Sunday, $75 billion by Tuesday night and $85 billion by this morning when a loan was put together. You see? These firms do not even have any idea how bankrupt they are themselves. Now we hear the US Treasury has to provide $40 billion to the Fed. This is flat out monetization that we feared all along. The dollar should certainly be crumbling relative to other currencies with all this news. Can other countries possibly be more irresponsible than the US?
The manipulation has not been confined to gold and silver. The precious metal stocks are suffering even worse manipulation. There are very few analysts out there following gold and silver companies and most of those out there have not got a clue. You pretty much have to do your own analysis and figure out where the real gems are on your own. The gold and silver stocks have been tossed around by pushing stocks through lines on charts. That is what serves as analysis in today’s world. John Doody of Gold Stock Analyst is one of the best gold analysts out there. This is the kind of analysis you should base your purchases on not lines on a chart used by the manipulators. Look at the comparison of two gold companies John just released in his mid-month update:
Market Cap 2008 Prod Operating Cash Flow OCF Multiple
Agnico Eagle $8151 mil 310k oz $217 mil 37.5
Northgate $387 mil 385k oz $193 mil 2.0
While Agnico does admittedly have much lower cash costs at around $100 per ounce rather than $300 per ounce, this does not come close to explaining why Agnico would trade at over 20 times the valuation of Northgate. This should give an idea of the opportunities in the sector.
How good do you feel about JP Morgan and like firms holding YOUR gold? How do you know they didn’t just short the shares to you instead of purchasing any gold? How do you know if the gold that you believe is yours is not a pile of gold in a room that every counter party points to and says that that pile of gold is yours, meanwhile 100 other custodians have said the same thing to other investors.
The good news is if you are a reasonably small investor there is still time. You should start to sell some of your paper promises and replace them with physical. Just make sure that you can get some physical and do it piece by piece until you are not dependent on these counterparties that are literally dropping like flies. If you are a big institutional sized investor, good luck, it is probably too late for you. Just try getting delivery of your COMEX or ETF gold and silver. Let us know how you make out.
Richard J. Greene
Clearwater, Florida
-- Posted Wednesday, 17 September 2008 | Digg This Article | Source: GoldSeek.com
