Saturday, February 19, 2011

Confiscation of Gold and Silver by the U.S. Government ?

RED ALERT email between Metal Experts - about Confiscation of Gold and Silver by the U.S. Government - Potentially this year for a New World Currency - from Multiple High Inside Sources.

I received an email with the words "RED ALERT". I received this from someone heavily involved and an expert in the metals and mining. I highly respect both men involved, as they know and always telling the truth about what is happening in the world of metals.

David Morgan
David Morgan of Silver-Investor, an absolute expert in silver and the mining field and has a wonderful and very insightful news letter. I am a member and get the newsletter due to the amount of his knowledge of silver/gold and mining. In fact, David Morgan has given me the green light to post bits of information from his paid subscription newsletter. I am thankful he is allowing that, as there is information in it that is not found any where else on the internet. His newsletter gives investment information of metals and mining as no other person I have read. I believe many benefit from the newsletter and I hope what small blurbs I reproduce here will also help others in keeping the value of their money as it is (but it is dropping fast every day - so action needs to be taken by all - in my opinion). I will start doing some postings with his insight within days. But I encourage anyone who wants to be on top of silver and mining and ahead of the game, subscribe to his newsletter!

Roger Wiegand
David Morgan passed on to me a "RED ALERT" email he received from Roger Wiegand. Roger Wiegand is someone else I follow in regards to the truth about the gold and silver markets. I love reading his articles on Kitco and his website -WeBeatTheStreet. I have had his website as a bookmark for years on my computer. A site for radio interviews with Roger, besides others like Jim Willie (who I follow, also) is Korelin Economics Report. In my opinion this is another bookmark needed for those who follow what is happening in metals closely.

I highly respect Roger Wiegand's articles and information and highly recommend everyone to follow him!

Both David Morgan and Roger Wiegand are about Truth of the metals market and do not sensationalize their information. So when I received this Red Alert email, I have confidence in this actually being very real in potential.

Roger Wiegand sent out a RED ALERT email to other metal experts/analysis, due to information from multiple high level inside sources of his, of the potential of confiscation of gold and silver from the American Public, this year for a new world currency.

Roger and I have exchanged a couple of emails regarding this Red Alert, with my asking permission to publish it. He has given me the green light to release this to the public, as long as I made sure to say this is not absolute, but a potential from his high placed inside sources.

This is the email sent out - without any changes and exact!

Editor: There is a plan to use the IMF (AKA US Treasury and Wall Street) to be the front man for the new world order and one currency.We also got disturbing news yesterday from an impeccable source that when gold touches $2,000 it’s confiscated in the USAfor about $200. Then it’s to be reissued by the Treasury for $10,000 per ounce to back the new IMF world currency using SDRS in 2011. Large physical gold is being moved to Canada.

I very much thank both David Morgan and Roger Wiegand for allowing me to post this information as I believe it will help all who read it to become aware of what is being discussed as a potential of future events.

The article in the email links to the IMF calling for a new trading currency in place of the U.S. dollar. The writing is on the wall. I just have to ask, has everyone been paying attention? Also when an email like this goes out from a very well respected metals expert to other experts in the field, everyone should sit up and pay attention!

A Look Back At History

As of this week, the S&P 500 has doubled from its March 2009 low, the infamous 666.
The Wall Street Journal was quick to note that it took place in just 707 days -- the fastest doubling of the S&P since 1936. Back then, it was a mere 501 days.

The Dow has a few hundred more points to go before it reaches the same milestone… but it’s climbed in less than two years from a low of 6,547 to 12,318 today:

That, indeed, looks similar to a chart of the Dow from September 1934-October 1936. In just over two years, the Dow doubled from 87 to 174:

What the Journal failed to note was what happened after that 100% climb in 1936. Let’s widen the scope a bit.

Ugh… After reaching that double in October 1936, the Dow topped out in March 1937… pulled back… came within about 5% of that top again in August 1937… and then plunged by March 1938 back to where it was three years before.

This was the infamous “Depression within the Depression.” As went the stock market, so went the economy. Whatever gains had been goosed by New Deal spending evaporated.

Here Comes Another Bubble, and a Crash That Will Dwarf the Last One, Unless . . .

Eric Janszen recently provided some very useful historical perspective in Harper's Magazine. He begins by explaining exactly what a financial bubble is: "A huge spike in asset prices that results from a perverse self-reinforcing belief system, a fog that clouds the judgment of all but the most aware participants in the market."

Asset hyperinflation starts at a certain stage of market development under just the right conditions.

The bubble is the result of that financial madness, accurately seen only when the fog of current events rolls away. It is a market aberration manufactured by government, finance, and industry -- a shared speculative hallucination and then a crash, followed by depression.

Bubbles were once very rare, says Janszen -- one every hundred years or so was enough to motivate politicians, bearing the post-bubble ire of their newly destitute citizenry, to enact legislation that would prevent subsequent occurrences. After the dust settled from the 1720 crash of the South Sea Bubble, for instance, British Parliament passed the Bubble Act to forbid "raising or pretending to raise a transferable stock." For a century this law did much to prevent the formation of new speculative swellings, i.e. bubbles.

Nowadays, however, we barely pause between such bouts of insanity. The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives (a kind of insurance policy that transfers risk to someone other than the bank or other institution that extended the credit) and debt securitization, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours. (more)

HES Radio: World Financial Report

The World Financial Report brings you timely information on the worlds most exciting markets like oil, precious metals, currencies, commodities and hard money markets like very rare color diamonds and collectibles. The World Financial Report makes predictions and gives investment advice and has been very successful in identifying trends in the marketplace.
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Gold, Silver, Copper, Nickel and the Slow Death of Money

A huge opportunity to hedge against both inflation and deflation is lying out there in the open. There are no transaction costs and right now there’s even a built-in discount. But most people will never realize any of this.

In 1933 President Franklin Delano Roosevelt signed Executive Order 6102, which made it illegal for U.S. citizens to hold gold bullion.

Prior to that, the $20 bill was essentially a warehouse receipt for a one-ounce gold coin. Prior to the Federal Reserve Act of 1914, the $20 bill actually told you this.

After Executive Order 6102, $20 notes weren’t allowed to be exchanged for gold anymore. Americans couldn’t legally own or trade gold as money and savings, only as jewelry or collectible coins.

A year after making monetary gold ownership illegal, FDR revalued gold from $20.67 per ounce to $35 an ounce with the Gold Reserve Act. The Act also required all gold and gold certificates to be turned over to the Treasury.

The dollar was debased. A chunk of the gold it used to be good for was legally removed. Instead of “containing” 1/20 an ounce of gold, each dollar now only contained (or represented) 1/35 an ounce. And of course you couldn’t actually own the gold itself.

In 1971 Nixon severed the last official ties between gold and the dollar. The dollar quickly sunk to its real value, which had been debased by years of money supply inflation.

By 1975 Americans were allowed to own bullion gold again, but during the roughly 40 years bullion gold ownership had been illegal, the dollar had been drastically debased. At its former lowest point in the summer of 1980, the dollar was worth only 1/850 an ounce of gold. It regained some value for a while, but for the past couple of years a dollar would only get you less than 1/1000 an ounce of gold (right now it gets you less than 1/1300 an ounce).

That was the story with a piece of paper that was merely standing in for a monetary metal. But what happens in the case of circulating coins actually composed of monetary metals?

Let’s look at quarters, dimes, nickels and pennies…

  • Prior to 1964, U.S. quarters and dimes were 90% silver. From 1965 to 1970 half dollars were 40% silver “clad” over a copper-nickel or “cupronickel” mix. Now quarters and dimes and half dollars have no silver in them at all. They are now entirely copper and nickel, but only enough to get a little more than 1/4 their face value.
  • Prior to 1983, U.S. pennies were 95% copper and 5% zinc. In 1982 we started getting pennies made of 97.5% zinc with only 2.5% copper plating. Since 1983 every new penny has had this composition.
  • The U.S. nickel has been cupronickel since 1946: 75% copper and 25% nickel with trace amounts of manganese. But that’s probably about to change…

Why are quarters and dimes no longer silver? Why is the penny no longer mostly copper? And why will the nickel likely follow suit fairly soon?

Because the amount of silver and copper and nickel in each case came to exceed the face value of the coin. The debasement of the U.S. currency over time has required the metal in the coins to be replaced with a cheaper substitute.

The average American has no idea what inflation really is or why currency debasement is a problem at all. He figures one metal is as good as another in minting of the currency…that when the face value of a coin falls below the value of the metal in the coin, it’s nothing more than a curiosity. Substitute a cheaper metal, they think. Problem solved.

And indeed the problem is solved for the government, which mints the coins made of real money at a loss after the effects of bouts of the inflation started by monetization of government debt. Savers and the overall economy on the other hand…their problems are just beginning…

But that is a story for another time. For now let’s look at the opportunities to be had when the government makes metals available for a fraction of their market price via coins…And let’s see if there are any opportunities left (Hint: there are!).

If you had seen the writing on the wall in the early 1960’s and started hoarding quarters and dimes while they still were almost wholly silver, you would have found that your dimes were worth a high of $3.57 each. Your quarters would have been worth $8.93 each.

In fact, these 90% coins still trade just like regular silver bullion bars and rounds. They were taken out of circulation — “hoarded” — by those savvy to debasement (Gresham’s Law tells us that good money will be hoarded when bad money floods the market). These coins were collected without any transaction costs. They were bagged up with different face value totals: $1,000 bags, $500 bags, $250 bags, $100 bags and $50 bags. These bags now sell with a transaction cost.

Each of these bags traded for over 35 times their face value because of the silver in the coins. At least they did at silver’s peak in 1980. Even after the peak and during the ensuing 20-year slump they were selling for more than three times face value.

Now thanks to waves of money and credit expansion from the Federal Reserve, silver (and gold) is pushing back toward its old highs. These bags of so-called “junk” silver are trading at more than 20 times their face value. They may hit 30 times face value again…and beyond…

Between 2000 and 2006 I was a big believer in silver as an investment (I still am). I begged all my loved ones to sell their (overpriced because of credit expansion) homes, pay off their credit cards and shove the rest of the money into silver.

No one listened. Here are a couple of graphs that makes them wish they had.

The red vertical lines in both graphs represent the start of 2006.

If you had sold your house at the very peak of the housing bubble in 2006…just before silver took off…you could now sell your silver and buy back your house…plus five more houses like it.

And there’s a lot more potential for that trade to get even better.

Silver shot up about fourfold, while real estate plummeted by a quarter or a third. That’s “so far.” Silver’s price could multiply again — even if does dip in the interim — while housing could drop even more.

Even if you didn’t catch the peak, but just saw the writing on the wall in 2000-2005, you’d still have done pretty well by selling your home and buying silver. You wouldn’t have gotten quite as much for your house, but you would have gotten silver at around $4 instead of $9.

Silver probably has another trick or two up its sleeve. It probably has a lot more upside than gold. It will probably play catch up till the silver/gold price ratio gets larger. Who knows?

Look at the other coin that was debased: the lowly penny…

Prior to 1984, the penny was almost all copper. Now those old pennies have been driven out of circulation and hoarded (Gresham’s Law strikes again). And they’re worth just under three times their face value: Almost three cents for the old one-cent piece.

Copper hasn’t had quite the success that silver has. Non-debased silver coinage has been worth 35 times face value and is currently worth 20 times face value and climbing. Copper coins’ triple-bagger over nearly thirty years doesn’t seem nearly as impressive. That’s because it’s not. But it is telling.

The thing is, silver now has transaction costs. Whether you buy bars, rounds or pre-debasement coins, you have to pay a middleman. You have to pay shipping if you get it online.

Meanwhile, copper pennies are still floating around, but hard to find. It’s really not worth the effort to gather underpriced copper this way.

But nickels? That’s a different story. Every single circulating nickel still has 3.75 grams worth of copper each…along with 1.25 grams of nickel. The silver dimes and quarters and the copper pennies are gone, but the copper-nickel or cupronickel nickel is still the only kind of nickel there is. For now…

What if you could have simply been there to start collecting silver quarters and dimes when they were actually circulating? You’d just have had to walk up to your bank and withdraw your money as quarters and dimes. This would have worked up to 1963. After that you’d have to sort through your quarters and dimes to make sure you didn’t have one of the new, non-silver ones.

The best opportunity with silver coins has long passed. But there is still a similar opportunity with silver’s humble cousin, the cupronickel five-cent coin.

Buy Two, Get One Free

Copper is currently about $4.60/lb. Nickel is currently about $13.00/lb

120 five-cent pieces is $6.00. Those 120 coins contain a pound of copper and 1/3 pound of nickel. That’s about $8.93.

If you deposit $6 in any bank in the nation, then withdraw your money as nickels, you get almost $9 worth of metal. That’s an immediate 50% return. That’s like paying for two thing and getting three.

You can’t legally cash in on it now (anti-smelting laws for pennies and nickels were introduced in late 2006). But the bullion market for cupronickel coins will develop, just as it did for silver U.S. coins. This will happen once the government starts minting five-cent pieces made out of cheaper metals.

To those who doubt this will happen, I refer you to the bags of silver coins trading as bullion for over 20 times their face value. You can easily order such a bag right now by going to any of a number of online bullion dealers. These bags of coins sell right alongside silver bars and rounds.

Right now, the government is subsidizing your copper and nickel purchases…and cutting out the middleman. As much as we complain about government, we ought to stop and offer them a little thanks for this.

The debasement of the U.S. nickel is looking very likely. Right now you have another opportunity to do what the silver coin hoarders did back in the early 1960’s.

Hoarding nickels right now gives you an immediate benefit. You get between $0.07 and $0.08 of copper and nickel for a mere $0.05. Thanks to Uncle Sam. But your good uncle won’t subsidize this forever. He can’t afford it.

What’s even more is that there is a hedge against deflation risk that you just don’t get with bullion. You see this discounted metal is minted. It will always have a nominal value of what’s stamped on it by its issuer.

So if the dollar strengthens and copper, silver, and gold all get cheaper in dollar terms, you can still spend your nickels just like any other money. Your purchasing power stays the same, maybe even increases.

But if the dollar declines, then the value of the cupronickel in the currency will rise against the face value. Eventually — at two or three times face value — these five-cent pieces will trade as bullion just as 90% silver quarters and dimes did and still do.

Again, there is currently no transaction cost to saving in nickels and no risk from plummeting metal prices. There is literally nothing (in case of deflation) to lose and everything (in case of inflation) to gain.

Your only real problem is storage; a few thousand dollars of nickels takes up a lot of space…and it’s heavy. But people had the same problem with silver when it was cheap. I doubt they’re complaining now.

Having “too much” cupronickel won’t seem like much of a problem if inflation continues to drive the cupronickel in five-cent pieces far in excess of face value.

At worse the dollar strengthens and you’ve just saved money whose purchasing power has increased. That is not a bad worse case scenario at all.

The cupronickel is the last bit of honest U.S. currency there is. Right now it’s dying slow, like the others did. But things could speed up quick.

The cupronickel could surprise us all. Gold and silver are having their day. Maybe eventually cupronickel will, too. What cannot be dismissed is the current discount on the stuff (thanks, Uncle Sam) and the extremely limited downside.

Gary Gibson
Managing Editor, Whiskey & Gunpowder

Martin Armstrong vs. His Model vs. Fractal Gold

Martin Armstrong has stated his expectations for Gold and the PM Sector to fall into the June period and to continue to correct into October based on his Economic Confidence Model. The fractal work that I do off of the 70’s Precious Metals Bull market and other areas of the charts does not agree with his expectations. Thus, in this writing I take a look at how the Precious Metals Sector has performed in reference to Mr. Armstrong’s Model “bottoms” themselves.

In this article I am using the unorthodox approach of providing the conclusions of the editorial at the beginning to help the reader grasp the issues at hand.


  1. Mr. Armstrong’s suggestion that Gold will trade down into his Model’s bottom into mid-May does not appear to fit the price movements for Gold, Silver or the HUI Index into the last two cycle bottoms on his Model.
  2. Based on the chart, it appears that although the Confidence Model might be effective in reflecting confidence or lack of confidence in the Economy, it fails to reflect the resultant effect of Dollar Inflation on the Precious Metals Sector’s price movements. Thus, as Dollar Inflation is applied to counteract economic weakness, the Dollar Devaluation drives the prices of the PM Sector higher into the “Economic Confidence Low” as represented by the Model’s “bottom.” I would expect this phenomenon to increase since Competitive Currency Devaluations are, in effect, potentially magnifying the rise in Gold, Silver, and the PM stocks due to world-wide paper currency inflation at this point in the cycle. That would match what we saw in the late 70’s parabolic move, and in the Fractal PM Sector moves in early 2002 and into early 2006.
  3. A further sideways move in Gold into October seems counter-intuitive considering the metrics which create the Gold Parabola. As Jim Sinclair has described in the past, a parabola is a mathematical equation of price movement accelerating versus time as price rises. The parabolic movement in the Gold Bull is thus a reflection of the collective investor psychology as the point of recognition of the different forms of inflation at hand becomes recognized by more people as time goes on at an accelerating rate.
  4. Cycles which reflect tops or bottoms do not provide information on the relative relationships to other tops and bottoms as they could be either higher or lower than previous tops or bottoms.
  5. The fundamental driver of $Gold is Dollar Inflation creating Dollar Devaluation. Those fundamentals suggest a rise in the PM Sector into the period of May/ June when QE II is scheduled to end. If so, after a correction of some period of time (my expectation is around 5 to 6 months duration), the Precious Metals Sector would likely again rise sharply based on the already announced fundamental Dollar Inflation needs that will have to be accommodated into late 2012 - and it will likely be a doozy of a move for the PM Sector. This “5 to 6 months out” for the next parabolic rise to begin after the next intermediate term correction, should that intermediate-term correction start in the May/ June period, would match Mr. Armstrong’s expectation for a “cycle bottom” to come in during the 4th quarter of 2011.

Mr. Armstrong’s Expectations

Mr. Armstrong’s recent writings have suggested that Gold will trade down into the bottom of his Economic Confidence Model that arrives in mid-May, stated as “2011.45” on the Model. In the first referenced writings Armstrong said: (more)


Stephen Schork of The Schork Report and Frank Holmes of U.S. Global Investors discuss the outlook for oil and gold. Schork expects higher oil prices to lead to higher gasoline prices this summer that could hamper the recovery. Holmes says we are only half way through the gold rally and prices are headed to $2,300.

The Economist – 19 February 2011

The Economist is a global weekly magazine written for those who share an uncommon interest in being well and broadly informed. Each issue explores the close links between domestic and international issues, business, politics, finance, current affairs, science, technology and the arts.

read it here

Birinyi: Stocks May Double by End of 2013

By Dan Weil

Investment guru Laszlo Birinyi says stocks may double within the next 2½ years. At a minimum, the Standard & Poor’s 500 Index will gain 31 percent by September 2013, he tells CNBC. That would mean a move to at least 1,744 from 1,331 currently.

“There was an extraordinary start to this bull market, and when you have starts similar to this, you end up with some very substantial moves,” says Birinyi, president of Birinyi Associates. “We’re out there and very comfortable being bullish.”

The S&P has nearly doubled from its March 2009 low (667), though it remains down 16 percent from its October 2007 high (1,576).

Birinyi’s forecasts are based on technical indicators.

Laszlo Birinyi
“Looking at the market’s history, which we found to be a useful guide in the past and has been a useful guide for the last two years, we’re going to continue to dance with who ‘brung’ us,” he says.

Birinyi recommends buying Exxon Mobil, Prudhoe Bay, Ralph Lauren, Priceline, Cummins and Hermes.

Others are bullish on stocks too.

“The economy appears to be strengthening, the momentum seems to be shifting, rates are trending higher, and riskier assets like stocks are gaining traction,” Kevin Giddis, executive managing director at Morgan Keegan tells Marketwatch.

“How long this all will last is anyone’s guess, but the facts are facts, and this story is becoming a compelling one.”

What Is The Greatest Threat Facing Our Time?

As Speculative Bullish Bets Surge, Is Rice The Next Silver (And Manipulated In Kind?)

When we reported on last week's net spec contract position per the CFTC, we noted that speculators are expecting a roughly 50% hike in the price of rice based on comparable historical patterns. Updating for this week's data confirms that the upside price bets, which increased from 6,652 to 7,114 have just surged above the previous top hit in late 2009, of 6,773. Yet they are still just shy of the all time highs from February 2008 when they stood at 7,883. As the spec activity in rice predates major price moves rather efficiently, the continued bets on a price surge mean something is bound to snap. And with rice prices continuing to be rather sticky, considering the move in all other grains, we may be in for a very major break out in the coming week. Or not: as we have now learned the hard way, the banking cartel has way to keep commodity prices low, until explosive break outs confirm that one can only manipulate a price down for so long. With recent disclosures by Wikileaks that China had been imposing pressure on the Treasury and the US banking system to get what it wants, is it too surprising to assume that just as JPM has long been manipulating the price of silver, so Chinese interests in the US (remember - quid pro quo in a M.A.D. world) have been instructed to keep the price of Rough Rice as low for as long as possible. If that is the case, are the Rice vigilantes about to call the Chinese bluff? If rice succeeds in breaking out from its $13-$16 trading range, the move to the upside could make the recent doubling in cotton, and surges in corn and wheat seem like child's play.

47 Statistics That Indicate That Economic Stress Points In 2011 Could Be Setting The Stage For A Global Economic Meltdown In 2012

Is the world approaching a devastating global economic meltdown? Right now there are a large number of factors that are creating economic stress points all over the globe. All of the crazy money printing that the Federal Reserve and other central banks have been doing is putting inflationary pressure on agricultural commodities, oil and precious metals. Massive floods, horrific droughts and extreme weather patterns all over the globe are ruining crops and creating food shortages. Some nations are now actually hoarding food, and in other nations rising prices have sparked food riots. The price of oil has been moving back towards $100 a barrel, and if it stays at a high level for an extended period of time that is going to have very serious consequences for the global economy. In addition, the growing sovereign debt crisis could erupt again at any time. Half a dozen nations in Europe are on the verge of insolvency, Japan's national debt is now well over 200 percent of GDP, and the global financial system is growing increasingly concerned about the exploding national debt of the United States. The truth is that the entire world financial system is a house of cards balanced on a razor's edge and it could come down at any time.

Sadly, very little has changed since the world financial system experienced almost a complete meltdown back in 2008. Global financial markets are still a whirlpool of debt and speculation. One really bad week could put us right back where we were prior to the infamous Wall Street bailouts. Very little in our world is truly stable anymore. As we have seen recently in Egypt, the globe can literally change almost overnight. All it would take is for one really bad event to happen and world financial markets would instantly start imploding.

So when will the coming economic collapse happen? Nobody knows for sure, but the fact that the global economy is increasingly becoming less stable as we approach the year 2012 is making a lot of people very nervous.

The following are 47 statistics that indicate that economic stress points in 2011 could be setting the stage for a global economic meltdown in 2012....

#1 According to the United Nations, global food prices set a new all-time record during the month of January.

#2 In early February the worst freeze in 60 years wiped out entire crops all across the southwestern U.S. and northern Mexico. Already, it has been reported that some U.S. supermarkets have doubled or even tripled prices for certain produce items.

#3 It is being reported that due to the recent horrible freeze in Mexico cases of tomatoes that would usually cost shop owners between 12 and 15 dollars are now going for up to $40.

#4 One of China's key agricultural provinces is facing its worst drought in 200 years.

#5 The Food and Agriculture Organization says that up to two-thirds of China's wheat crop could be at risk of failing due to weather conditions.