Silver in Backwardation - again!

Futures Silver prices are in backwardation again. Take a look at the snapshot below:

Note the column labelled "Last". The prices that are further into the future are lower than the cash price or the September '12 price. This is rare and abnormal in the silver market and is usually an indication of physical shortage or suspicion of shortages. There has been much previous speculation that silver shortages would become more acute. This BBC article from mid-April, 2012 is an example. The recent rebound in the price of silver is consistent with these observations.

Financial Repression

It's not new but Financial Repression is a term seen recently in many articles, even in the mainstream media. It refers to a purposeful and methodical policy approach by government towards solving its deficit/debt problems by massively cheating investors and savers rather than contemplating default. This is accomplished through strong government control and intervention of interest rates and financial institutions. Savers are given close to zero interest in spite of considerable inflation, which is usually purposefully under-reported.

Because the problems are far more severe than in the past and because world markets far more fluid today, I doubt that governments will be able to control markets successfully enough this time around to prevent a bond collapse (higher interest rates) or some other financial crisis. Many have already begun to flock to gold and silver in an attempt to escape controlled markets. However, so far, the U.S. has succeeded in maintaining absurdly low yields on its bills and bonds, perhaps giving more support to some cynics' views that these are certificates of guaranteed confiscation. For a thorough treatment of "financial repression", please see this excellent article by Daniel R. Amerman.

QE3 Gets Closer as U.S. Economic Indicators Falter

As economic storm clouds gather (see CNBC for example), pressure mounts on the Federal Reserve to launch QE3. They will deny and obfuscate as long as possible but at a certain point they will mount their white stallions again and sally forth to the "rescue". Trillions more will be printed and trillions more in debt accumulated. Currencies, stock/bond markets and commodities will gyrate. Gold and silver will make new highs while U.S. credit ratings will be downgraded. But I'm getting ahead of myself a bit. The economic situation and especially the stock markets will first need to suffer a bit, enough to be noticed by the general public, maybe even some panic drops in market values, for example. Political and public consensus will then build around the new imperative of QE3 although it may be called something else to avoid the obvious embarrassment of creating a string of failed initiatives.

Commodities at new highs!

Once again, commodities are at new highs. Some are at new highs, some are close to new highs and the precious metals are currently in the lead. Why is this? Has the reckless printing of money around the world anything to do with it? Or are speculators simultaneously attacking oil, coffee, copper, gold, silver, corn and soybeans? If printing your way to prosperity is the answer, then why doesn't the fed just send every citizen a cheque for $1,000,000. Of course, gasoline prices might just go to $50 a gallon and a 1/2 pint of strawberries might also then cost $35. H'mmm

European & U.S. Printing Spurs the Precious Metals

Recent events in Europe and the U.S. continue to support the thesis that governments simply don't have the stomach to take the actions necessary to bring spending in line with income. Whether it be in good times or bad, "now" never seems to be the "right" time to cut spending, raise taxes and balance the budget. So the can gets kicked down the road again. Mind you, this can is growing bigger by the day. In the meantime, since solely borrowing is no longer an option, governments are resorting to ever increasing levels of QE (Quantitative Easing), or printing to make up the budgetary and bailout-induced shortfalls. The precious metals markets see this and react by moving higher as increasing numbers of citizens become uneasy about the future of their national currencies. This is particularly so in countries such as Germany whose citizens still remind themselves of the carnage wrought by the hyperinflation and total destruction of their precious Marks during the Weimar Republic days. So, Gold and Silver have now moved to new highs against most major currencies. Below is a chart of Gold versus the $US.

Precious Metals Manipulation Entering Rough Waters?

The gold/silver manipulation game may be entering another stage as it appears that the increasing difficulty of securing physical delivery is leading to extraordinary measures by the London Bullion Market Association Banks (LBMA) to obtain bullion and to further obfuscate trading, delivery and inventory data - see LBMA Closes Off Public Access To Key Bullion Bank Trading Data

The Bogus Bullion-ETF's

Stay away from bullion ETF's! At some point, these ETF's will disintegrate like Lehman's. Why? Because many of the same leverage tactics are being employed with lots of clever derivative instruments while the required gold or silver-backing is simply not there. You are buying paper gold, nothing else. When the @3%** hits the fan, these ETF's have little chance of being honored.

See this excellent article for more detail.

Gold and Silver Manupulation Hits Mainstream Media

With a delay of several days, the MSM is finally beginning to report the story on the whistle-blowers charging manipulation of the gold and silver markets. See this story published today in the New York Post Business Section.

Silver, Gold, Manipulation and GATA and the CFTC

There are some major developments regarding silver and gold manipulation, GATA (Gold Anti-Trust Action Committee) and the CFTC (The U.S.  Commodity Futures Trading Commission).  Here is a YouTube video that summarizes things pretty well. If you haven't followed GATA accusations, now would be a good time to bring yourself up to speed on what could be a history making situation soon. To hear an actual interview on King World News with whistle-blower Andrew McGuire, go here.

Auto-updating Gold and Silver Spreadsheet for Coin and Bullion Holders

If you are looking for an Auto-updating Gold and Silver Spreadsheet for Coin and Bullion Holders, see mine here.