Silver Blog Bash Update, David Morgan Commits Consultation

In an email earlier today David Morgan, author of Get the Skinny on Silver and author of silver newsletter Silver-Investor.com said he was giving a 30 min consultation session over the phone for the Silver Blog Bash. Talk with David one on one for 1/2 hour, which David lists on his website as a cost of $187.50.

According to his website, “Mr. Morgan has been published on Gold-Eagle.com, Goldseek,The Herald-Tribune, Contact, Idaho Observer, NY Sun, Investment Rarities, The Gold Newsletter, Le Metropole, Futures Magazine, Marketwatch, Resource Investor, and has been interviewed on several radio talk show including, Financial Sense Newshour, Hard Money Watch, Tiger Financial News, Free Market News Network and appeared on television in both Canada and the USA. Mr. Morgan was published in Global investor regarding Ten rules of silver investing.”

Tags: silver blog bash

Silver Blog Bash, the Reader Contest to Win Silver

To celebrate the launch of the Silver Blog, the Blog and Silver Monthly are having the Silver Blog Bash. From Sunday April 5th to Saturday April 11th 2009 the Silver Blog Bash will officially run.

As of right now, we have American Silver Eagles to give away, and we are hoping David Morgan, Jason Hommel, and others also step in to give away some gifts. This is where I need your help; if you know of any coin dealers, newsletter or book authors that would enjoy giving away prizes as well as getting publicity for being a sponsor, please email me at: doolittle@silvermonthly.com. Your help would be graciously appreciated.

Now, let me introduce the Silver Blog. The Silver Blog is a blend of social media tools you might be familiar with. It’s a blog (weblog) listing all the stories users submit. At the same time the Silver Blog is a tool users can use to rate stories others have submitted. Think Digg, Mixx, or StumbleUpon but exclusively for Silver Investors.

As for the Silver Blog Bash, there’s five different ways you can win.

New User — 10 Winners with $50 BullionPost.com account credit.

To win this contest all you have to do is register at the blog. In our database each user receives a unique numerical ID, so when the contest gets underway we will use a random number generator to pick a random user who registered. Registering is easy, all it takes is a username, email, and password. When the contest gets started be sure to register — its the easiest way to win.

Comments — 5 Winners get a Signed copy of The Collapse of the Dollar

To win the comment contest, all you have to do is comment on a story another user has submitted (check out this example). Don’t worry for the comment contest you won’t have to register. You will, however, be required to make a valueable comment: no off topic comments or spam will win. The winner(s) will be chosen just like the New User winners in that each comment has a unique numerical ID. To pick the winner(s) we’ll use a random number generator to pick out random numbers, which then become our comment contest winners. Check out the most recent stories and leave a thoughtful comment.

Most Comments — 1 lucky Winner will get to speak with David Morgan for 30 min.

The most comment contest will require a little more work than the other contest, but will also have much better prizes. The winner(s) of this contest will be the user(s) who submit the most comments over the duration of the contest. You can see the ‘Top Commentators’ on the right side of the blog right below ‘Top Submitters.’ For comments to qualify for this contest, each comment must be relevant, at least a little bit thoughtful, and can’t be spam in anyway.

Most Stories Submitted — 1 winner will get a sealed roll of 2006 Silver Eagles (20 coins)

Similar to the most comments made, the winner(s) of the Most Stories Submitted will be the user(s) who submit the largest number of relevant, quality stories. Duplicate stories will not be counted. For this contest, users will have to register (and will be entered in the new user contest) and submit stories relevant to the silver market. Submitting new stories is incredibly easy, just visit the ‘Submit New‘ link and fill out the details of the link you are submitting. Be sure to do a quick search to see if your story is a duplicate before submitting a new story.

Highest Voted Link — 1 winner will receive 10 silver rounds from Silver50.com

As you can see, each link submitted by a user has an vote count to the left of the story link. To win the Highest Voted Link, the user(s) must accumulate the largest number of votes on one link he or she submits. Right now with three votes, the highest voted story is the welcome post for the Silver Blog. I know someone can submit a better story.

Questions?

Please leave a comment in the form below or email doolittle@silvermonthly.com for questions about the contest. And remember the contest is coming soon, so be sure to come back to have some fun and the chance to win some silver!

Silver Blog Bash Prizes!

This list will be updated as the sponsors update Silver Monthly for the Silver Blog Bash.

1. Talk with David one on one for 1/2 hour ($187.50)

2. 5 signed copies of The Collapse of the Dollar and How to Profit from It: Make a Fortune by Investing in Gold and Other Hard Assets by James Turk and John Rubino ($14.95/copy).

3. 10 Silver Rounds provided by silver50.com. Each silver round is .999 fine silver weighing 1 troy ounce. ($153.90)

4. 10 accounts with a $50 credit per account at BullionPost.com — buy or sell silver bullion for free at this new auction site.

Tags: silver blog bash, Silver Contest, win silver

The Silver Slam

Last week I mentioned that CIBC slammed the silver market and gave my opinion of where their analysis missed the mark. Tonight as I pen this missive in haste due to packing and flying requirements early tomorrow, it seemed the best to give a short introduction on the Silver Slam.

The Silver Slam is when the door on buying silver slams shut. Now, before those thousands of emails come flying my direction let me state that knowing free market economics there in theory will always be silver for sale at some price and we cannot run out of silver.

However, my point is what I concluded with last week namely and I quote… “The amount of silver that is available for investment is so small, probably 50 million to 100 million ounces at best. That is a pitifully small market, relative to all the paper that’s flying around. And there will be a day like no other day, when someone is not going to be able to deliver silver to someone who can make some noise, and when that event takes place it will probably be pushed aside, looked at askew, and not recognized as the fact that it is. But eventually the truth will leak out, and once that happens I think more and more people will start to get much more interested in the silver market.”

With that in mind please click on the following video and pay particular attention to the pie chart that I describe. Basically, about one to two billion dollars is all it would take to buy up the silver bullion described by me in this video as “remainder.” If that were to take place then for all practical purposes the door just slammed on the silver market.

I have been “Called Out”

I do want to take a minute to explain about something that some have called or written me about—the signoff in my weekly column: “It is an honor to be, David Morgan.”

It might sound egotistical and I gave it a great deal of thought before deciding to use it. Most, including myself, are not scholars in the use of the English language. That statement was taken from one of the original patriots, and it means it is an honor to be (alive), to exist, to be of service to others, or to be given the privilege of “being” alive. Since it is followed by a comma, it could apply to anyone—I’m sure you get the idea. It is my understanding that Thomas Paine used that complimentary close.

The United States of America has come a long distance from the original intent, yet freedom of speech prevails, in newsletters like this and across the Internet. In my view, there is nothing as important as the Free Market of Ideas.

“Where freedom is,” said Benjamin Franklin, “there is my country.”

“Where freedom is not,” replied his friend Paine, “there is mine.”

Silver is information for informing the nations

The collapse of banks, currencies and the markets is not a failure of Biblical sound free market capitalism, because that has never existed. Rather, the collapse is a failure of fraudulent paper money systems based on usury.

Usury is not “excessive” interest. Usury is not “excessive” profits. Usury is any interest on a loan. Any interest on a loan is excessive because of the mathematical insanity of compounding interest, or exponential growth of even 1% per year.

If you invested an ounce of gold at 1/3 of 1%, 6000 years ago, you’d own all 5 billion ounces of gold in the world, and if you invested it at just over 2%, you’d own about all the atoms in the entire universe, it would all be gold, and it would all belong to you.

That’s why usury systems are mathematically unsustainable; it has nothing to do with a “faith based religion”, the Bible just makes a mathematically correct assessment of reality, and turns it into advice; which is, don’t lend at usury (interest) to anyone in your own nation!

That’s why usurious wealth systems that attempt to grow faster than such limiting rates are doomed to decay in spectacular ways and create vicious “economic cycles” that are not random at all, but mathmatically certain to happen.

Usury is mathematically certain to lead to slavery, and is thus incomparable with freedom, since slavery is the opposite of freedom.

This is why, according to the Bible, all debts must be forgiven, for everyone in society, every 7 years, and all slaves must go free. Free people are just more productive and beneficial to humanity than slaves. God’s way leads to prosperity, and usury systems lead to poverty and slavery.

It is said that in a free market system, freely changing prices function as informational signposts, or incentives to help people properly decide which jobs to pursue, and how to properly allocate resources for production. The opposite system is central planning, whether through a large government, or large company.

We’ve all just seen it go wrong. The banks and government lent far too much money for homes, pushed up home prices too much, which then led to a crash, and unemployment for anyone in construction, and now the collapse of the banks that were forced by government to lend indiscriminately.

We’ve all just seen it go right. Rising silver premiums, or prices for manufactured silver products such as rounds and bars in 2008, was a sign of the shortage of such items, and led to the start up of several mints and thus increased production which has helped to bring such premiums down slightly.

While the prices for investment products of silver may be somewhat free, the prices for 1000 oz. bars is more dominated by paper futures contract trading of excessive promises to deliver, and is thus not as free.

So, freely changing prices work to create proper production incentives.

But prices that change based on excessive usury create improper and unsustainable incentives.

So, manipulated prices create vortexes of black holes of mis-information and deception that lead to mis-allocations of production, and create a literal “economic dark age”.

We are living through one of mankind’s bleakest economic dark ages right now, because prices for precious metals are manipulated, and because usurious paper money systems have just hit their all time historic peak, and are continuing to crash.

The good news is that economic prosperity for all people should then get better, if only prices for gold and silver are allowed to rise, and return to their true free market values.

Higher precious metals prices will create more high paying mining jobs, and more base metals discoveries and production which are the true engine of long term economic growth, especially if mankind is going to progress with things like electric cars which require many times as much copper, nickel, and other metals.

The best way to fight AIDS and poverty in Africa and other parts of the world, would be to reject paper money and buy gold, which results in higher paying jobs for gold miners all over the world. The wealth multiplier effect of a high paying gold mining job extends out ten fold and creates ten more jobs for every single employed gold miner.

Free market prices are not just “changing” prices, but rather, they must be prices based in gold and silver, and not paper money. Paper money prices cannot be a sign of free market economics, since paper money cannot be a form or part of true free market economics.

So, it is not just “freely changing prices” that is a sign of a free market. The manipulated price of silver also changes!

Rather, all prices of all goods and services must be denominated and priced in terms of ounces of gold and silver, and then, we can say that is a sign of a healthy and functioning free market based on honest weights and measures.

So, what is silver? It’s not just money. It’s information. Since silver is not being used as money as a medium of exchange, that is evidence that no free market exists, and that economic failures are a failure of central planning, not a failure of the free market.

Silver is telling us that for too long, families and corporations and governments have preferred to voluntarily enslave themselves with un-payable debts of paper money that was created by a government granted monopoly given to the Federal Reserve, who increasingly rules without the approval or knowledge of Congress.

The economic failures of today are the failures of slavery. Even when debts are entered into voluntarily, to an entity with a government granted monopoly, it’s not really freedom.

Silver and paper are opposites.

Silver is payment in full. Paper is a promise to pay, and/or evidence that you have parted with your silver, or been willing to delay payment, or work for nothing, as a slave.

Silver is information, motivation, pursuasion, and freedom.

Paper money, then, is deception, oppression, force, and slavery.

When people get good information, they become intelligent.

When people make good use of valid information, they are wise.

Silver is not just information then, but rather it is the evidence of wisdom.

Especially at today’s low prices.

To benefit from the wisdom of silver, you have to hold it yourself. You cannot own an ETF, or silver certificate, or silver futures contract to get the benefits. All such paper promises will fail as the entire system of paper promises comes crumbling down, as it periodically should, to restore freedom to mankind.

Don’t tell yourself that you cannot afford to store it. If you can afford to buy it, you can afford to protect it. Buy a safe. Bolt it down. A safe will protect its contents 99.9% of the time, and is the perfect place to store all things .999 fine.

Please nominate this as an “idea worth spreading.”
http://www.tedprize.org/
http://www.ted.com/index.php/pages/view/id/77

It has been my life’s work for the past ten years to work on this one thing: If I had one wish, it would be that people would wake up to the wisdom of owning and exchanging physical silver, and reject supporting the fraud and slavery of paper money, so that mankind could enter another golden age of prosperity and freedom.

Tags: free market capitalism, sound money

Gold Gazette’s Top Five

The Gold Gazette, a newer destination for gold investors has written several articles of excellent quality, but the web isn’t showing any favors. So I’d like to point you to some of them to read.

1. Gold Coins or Gold EFT? — the debate continues with this piece about the differences between investing in gold using physical bullion or paper. the Gazette’s conclusion? “It’s the difference between a technical investor or a fundamental investor that will decide the Gold ETF or gold coins,” explains the Gazette writer.

2. Foreign Government Gold Coins — with the hundreds of coins minted for investors and collectors a like the decision becomes, not to buy gold or not, but what gold coin to use as the investment. The Gazette says, “Unless you are a collector, the investor should stick with his or her domestically minted coin then move to the staples such as the Canadian Maple Leaf or the South African Krugerrand because of the well know status these coins command.”

3. IRA Investors Increasingly Turning to Precious Metals — While this article is a news piece, it does highlight the fact that many investors miss. IRAs can be used as gold investment vehicles. On the same note, the Gazette explains in another article How to Invest in Gold Using an IRA.

4. Answering the question, Are Gold Proof Coins Worth More Than Regular Gold Bullion? — the Gazette writes explaining why proof coins can be worth more than regular gold bullion. And, even if the proof coins can be worth more, proof coins might not be the best investment. Regular gold bullion fills the bill for almost all investors, while proof coins are for the collecting types.

5. Why is Gold Going Down in This Stock Market Panic? — a guest writer for the Gazette explains the gold market decline during the larger financial market meltdown. “As long as enough of these hedge fund managers are selling, gold will continue to stay at current levels,” notes Jeremy Stevent.

Tags: gold, gold gazette, gold-investing

Intrinsic Value of Silver and Gold

One man emailed me to express his dismay that his friend said that Gold has no intrinsic value; that it’s value is only a “perceived” value. Well, no surprise, that’s what they teach people in college these days.

For over 6000 years, men have been able to perceive the value of gold. Some, on the other hand, must be taught why gold is special, maybe because they have no gold.

Gold may have no intrinsic value, if men have no need of any luxury items, if men have no need of a store of value, if men have no need for any long term planning, if men have no need to protect their wealth from the confiscation of governments, or if men have no need to protect their wealth from badly managed companies that are in debt, if men have no need for a form of wealth that is compact and light weight for the value, and does not spoil, not easily forged or faked, and is easily bought and sold for low fees, and is widely recognized the world over.

In fact, many of those are properties intrinsic to gold, and not other metals, except silver.

It’s absolutely true that I would not need silver or gold if I had all my current and future needs fulfilled. But it is impossible to fulfill future needs today; by definition, the future comes in the future. And so, as long as I have any uncertainty about my future needs, then gold is a good substitute to have in the here and now, because I can reliably use it for my future needs.

The beauty of gold is that it is a pure luxury item. Most of the people in the world do not have the luxury for long term planning for future needs. Most of the world, living in poverty, must generally work all day long just to satisfy their basic needs for the day.

The beauty of gold is that it is a pure luxury item. Given that it is a luxury, the price can rise extremely high, and nobody can ever get hurt by a high price, since it is a luxury. A high price raises the value of all of the gold that exists, and creates capital, increases wealth, and improves standards of living all over the world.

But a low price of gold is deadly. A low price hurts the entire world. It removes from the world the ability to use gold as a store of value, a low price has destroyed the store of value that gold should have represented. A low price destroys the entire industry of gold mining, from which we also get byproduct metal production, such as silver, copper, zinc, lead and a host of other vital and necessary metals.

But a low current price makes silver and gold even better stores of value for the future, as low prices don’t last forever.

Silver has over 10,000 different and vital industrial uses. Nothing is used in as many different applications as silver, except for oil. But oil cannot be used as money, like silver, because oil is 1000 times as heavy and bulky as silver, for an equivalent value.

Nobody is going to buy 100 barrels of oil and have them delivered to their house, to be stored on their front lawn, at $40/barrel, to store $4000. But nearly anyone can easily buy and store 300 ounces of silver, at $15/oz. to store $4500.

So silver and gold are not only vital to long term planning, but they are extremely convenient!

The real beauty of silver is that it has intrinsic properties that are superior to gold, so that in some applications, silver would be used in preference to gold, even if the two were the same price! Silver is more electrically conductive than gold, and more reflective, and a greater conductor of heat.

The real beauty of silver is that since it is a vital industrial commodity, and has been consumed by industry, it has become scarce, and should outperform gold as a store of value in the future, which is the primary reason that people should want silver and gold.

The real beauty of silver is that so few men desire silver as a store of value today, so that when that begins to change, the value will increase dramatically, and the value will rise exponentially, and create so much wealth for so many men who have the capacity to think and plan for the future. And it is good for society for such men to be rewarded!

Silver is often not perceived as if it is as good as gold, because it is heavier than gold, for an equivalent dollarized value, given the price ratio of about 75:1. However, since so few old men (as old men these days often have so much of the money) are willing to do the work of lifting silver, that’s exactly why you should take the pains to do so. Or, if you are younger, at least try to convince your parents to store silver, as you can do the work for them.

Some Christians seriously wonder if Christians should be concerned about the future, after all, there is a Bible verse of the words of Jesus that says,

Matthew 6:31 Therefore do not worry and be anxious, saying, What are we going to have to eat? or, What are we going to have to drink? or, What are we going to have to wear?

32 For the Gentiles (heathen) wish for and crave and diligently seek all these things, and your heavenly Father knows well that you need them all.

33 But seek (aim at and strive after) first of all His kingdom and His righteousness (His way of doing and being right), and then all these things taken together will be given you besides.

34 So do not worry or be anxious about tomorrow, for tomorrow will have worries and anxieties of its own. Sufficient for each day is its own trouble.

It’s been my experience that those people who are overly concerned about food and clothing, and who wish for, crave, and diligently seek out such obsessions as food and clothing, are the kind of people who end up spending the most on food and clothing, and thus, they end up not saving as much. One of the first things that debt and credit counselors tell people is to avoid those designer clothes and Star bucks Coffees, so that you can save money, so that you won’t worry so much about your financial future.

Proverbs 23:20-21 Do not join those who drink too much wine or gorge themselves on meat, for drunkards and gluttons become poor, and drowsiness clothes them in rags.

And of course, the best way to not be so anxious about the future is to have a nice store of value for the future. Gold and silver, as luxury items, represent self denial in the here and now, and thus, they represent “self-control”, which is one of the fruits of the Holy Spirit. Silver and Gold are the creations of God, given by God to men for our effective use. If the elements didn’t exist, or if they existed in different relative abundance, I’d be preaching about the effective virtues of storing up some copper and/or platinum or palladium or rhodium.

As Christians, I believe we, of all people, ought to plan for the future the most, because we are commanded to seek first the heavenly kingdom, the future reign of Christ. Imagine your future self to be wiser, more under the authority of Jesus Christ, more capable of doing good, with Christ living in you with more power and authority. That’s who you are giving to, when you save for your future self, when you have begun to conform yourself to Kingdom principles. You will leave for your future self an inheritance, and you will end up leaving good things for your Children’s Children. That is the opposite way of the world, which is to leave to their future unpayable debts and obligations, because they spent it all on the pleasures and instant gratifications of today and yesterday.

Those who care not for the future, or the future resurrection, are mocked by Paul, who said that if there was no future resurrection, then we should live for the day, and consume it all today, with no care at all for the future.

1 Corinthians 15:32 If after the manner of men I have fought with beasts at Ephesus, what advantageth it me, if the dead rise not? let us eat and drink; for to morrow we die.

Again, those who do not plan for the future are mocked by Jesus.

Luke 14:28 For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?

It is elementary to basic human nature to want to plan for the future; it’s part of what God expects us to do. Even the animals can plan for the future, and we are told to consider their ways.

Proverbs 6:6 You lazy people can learn by watching the ant
7 Which having no guide, overseer, or ruler,
8 Provideth her meat in the summer, and gathereth her food in the harvest.

Proverbs 30: 24 On this earth four things are small but very wise:
25 the ants are a people not strong, yet they prepare their meat in the summer;

So, plan for your future, save for the future, store up things for the future.

Deuteronomy 28:8 The LORD shall command the blessing upon thee in thy storehouses, and in all that thou settest thine hand unto; and he shall bless thee in the land which the LORD thy God giveth thee.

Proverbs 21:20 Be sensible and store up precious treasures– don’t waste them like a fool.

Many well meaning Christians have castigated me over the years, as they misapply verses such as these:

1 Timothy 6:9 People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction.

But I similarly warn against such things.

Many men who desire “riches” excessively and obsessively, tend to try to take shortcuts. They ignore all the intrinsic properties of silver and gold, and instead, try to trust paper promises of futures contracts for silver and gold instead. But they fall into a trap; they get margin calls and lose everything. Or margin is raised as prices move up and then get caught in a temporary downswing in the metal prices that they cannot afford.

Those who trust in futures contracts are not trusting God’s provision of gold and silver; instead, they are trusting the promises of men. They are not taking responsibility for their own wealth; instead, they try to take control of the wealth of other men, and that kind of covetousness backfires on them.

The Big Fish That Got Away: Silver Standard

Who says you can’t make money in these markets? Silver Standard Resources (SSRI) provides us with one great example.

Silver Standard like virtually all stocks took a terrible beating in the recent market sell off touching an intra-day low of $5.35 on October 27th. Have you looked lately? Wow, SSRI has rocketed up to $20. Even though our specialty is warrants, SSRI was on our radar screen and at a resource conference last October in Toronto we suggested since SSRI did not have any long-term warrants trading that investors should look at the LEAPS available.

Let’s examine Silver Standard a little closer. They have the largest published in-ground silver resource of any publicly-traded silver company, with a pipeline of projects in Argentina, Peru, Mexico, Canada, Chile, the United States and Australia. As a development stage company they have a portfolio of silver-dominant projects located in seven countries in the Americas and Australia and they are currently developing the Pirquitas property that is located in the province of Jujuy in northwest Argentina.

Their financial statements as of September 30, 2008 reflect a cash balance of $103 million. Interestingly SSRI also holds shares or warrants in several companies including Aurcana Corporation another one of our favorites.

The common stock is quoted on the Nasdaq Global Market under the trading symbol SSRI and listed on the Toronto Stock Exchange under the symbol SSO.

The chart speaks for itself. Speculative investors could have purchased the shares or LEAPS on the plunge in October while more conservative investors should have been buying as the shares crossed to the up-side the 50 Day MA in early December around $10. While SSRI still has a lot more upside potential we would be now be inclined to wait for a pullback to around the $15 range. While SSRI does not have any long-term warrants trading there are many other companies which do and we encourage you to visit our website.

Tags: silver standard

Attention: Physical Silver Investors

Guest Post by Isaac Kahan, You have an edge over the Wall Street trader! First: Let me define over whom you have an edge.

In every trading market there are different categories of people trading it. They include:

In the silver futures market, there is the scalper or floor trader: This is the trader buying & selling the item with no attachment to the product itself.

What this trader is concerned with is the difference between the bid & the ask. To explain these terms, know that every tradeable entity really has two prices.

The bid, which is what you get if you sell the item now & the ask, which is what you can buy the item for. For example, If silver is trading at $10.50, the ‘real’ number if you want to sell it would be $10.495 & if you were to buy it you would have to pay $10.505.

This half penny in ether direction is the spread that represents the money the floor traders make when they buy from one person & sell it to another. This same system happens with everything such as wheat, sugar & even treasury bonds, etc.

The next kind of trader is the hedger. This trader can be from a gold & silver mining company to a dealer in metals.

For example, a dealer in metals gets an order and sells some coins & bars. He needs to replace this inventory that he just sold & buying from the market is the best & cheapest way to cover his position. The same thing happens when a dealer buys coins & bars but has no customer for it. He will go out & sell a contract on the market so as not to lose money should the market go against him.

The speculator. This trader buys or sells for any number of reasons. It might be that he or she is following the trend or any other system that they have. It might be that they have a gut feeling. It really doesn’t matter what the reason is. What does matter is that these are the people that are out there buying & selling & causing the market to move.

These people are helpful in the marketplace as they are providing liquidity & allowing for the markets, such as silver, the ability for the spread between the bid & ask to be only half a penny.

The concern with the different types of traders is that in most cases they don’t care about the underlying market. All that the floor trader cares about are making the half penny spreads between the bid & ask & to be able to do it many times in a day. The more such trades he makes, the more times he can earn the spread. All that the hedger cares about are that he can cover his exposure to the market so if he bought the actual silver then he needs to sell it at the best price. In most cases the hedger is not a true hedger in the sense that if he bought silver at 10.5 & now silver is at 10.51 he will try to squeeze out a little bit more & wont sell it till it gets a little higher. By the end of the day these people will try to be flat in the market.

What about the “speculator”? This person is buying or selling for his own undisclosed reasons. He or she feels that the price will go up or down. This is the person that really interests us. Why? Simply put, it is this type of trader who really moves the market.

In the end, the scalper is just trading for the ½ cent the dealer hedger is covering the base so in reality nothing that he is doing is moving the market all that he is doing is buying in one place & selling in another.

But the speculator is the only person that is causing the market to move. How? The speculator is the only one who is really holding a position.

What causes the speculator to cover their position? There are three reasons.

1) To take profit.

2) To cover losses.

3) Found a better market.

For reasons 1 and 3, you can’t predict where & when the speculator will get out of their position. The speculator might be using a specific dollar amount & since it is not known when he got in the market it can’t be determined what will compel him to get out. The speculator might also be using any number of technical tools available to him. He might be using trend lines, overbought & oversold levels or even just round numbers (for some reason people like to use all round number such as 10 dollars 10.50 & 11 and son on).

Don’t worry; we are starting to get closer to disclosing where you have an edge.

To some extent the speculator will have to cover losses. This is done in one of two ways:

1) Essentially, the opposite of taking profit. The speculator says that he has had enough of losing & just bails out of the position.

2) The speculator has a certain dollar amount that they are willing to lose. Now, remember, since it is not known what that amount is nor is it known where they got in, we simply can’t know when they will get out.

Now let me interrupt with a little story. It was back in 2002 & a customer/friend of mine comes up to my office & shows me his brokerage statement. His final balance was a little more than one million dollars. I don’t remember how long it took him to make this but it wasn’t more then three or four months. I told him to be careful because by this time I was already trading for 15 years & I knew that trading with a gut feeling cannot achieve such returns in the long run. Anyway, to make a short story even shorter, it wasn’t more then one month later, and he was back ashen faced. When I asked what was happening, he whispered “margin.” To this day I don’t know why I had not warned him of this as I should have known that this was the only way for him to make so much in so little time. You see, the margin is a silent killer. Just the mere fact of getting a call from your broker saying that you have to pay up or else . . .

This changes the way your thought process works. From having a rational train of though of where you want to buy or sell you go to thinking what can I do to get this guy off the phone! Another thing is that for some reason or other the margin clerks only call you when the extreme is happening. I feel that if I had the ability to take the other side of any trade that is happening because of a margin call I would be extremely rich.

Now back to the program.

All three classes of traders that I spoke about before have margin issues. The least is the scalper because he isn’t really holding any positions it doesn’t really matter to him. Nevertheless, in order for someone to make a lot of money as a scalper he needs to trade on a large scale. So if a scalper trades 10 times a day with one contract of 5000 ozs silver, then each ½ penny that he makes comes to only $25.00. I don’t know anyone in this business that will be happy to earn $250 a day & remember the 5000 represents $50,000 of underlying value. Also keep in mind that no person is right all ten times. So what does the scalper need to do? He has to over trade so instead of trading just 1 contract he has to trade several.

Now the hedger has things a little better because since he has the underlying stock, his margin requirements are lower than that of a speculator. So let’s say a dealer sold his silver at $10.00 and re-buys it on the Comex. There should not be any problem because he has the money from the sale to cover any margin requirement. But what if the dealer bought some silver & sold it on the Comex as a hedge? Now he spent money to buy the silver & he needs to have extra money to cover initial margin. If the market moves against him, he will have to cover even more money. Now granted he has not lost money because the silver is his and he now has the choice of going un-hedged or he can sell some of the silver that he has at any price to give him some money to pay the margin clerks.

This brings me to another category: the silver investor.

I will not talk about selling silver short because since silver can go up & up your risk is unlimited.

But the silver buyer that is buying silver with his or her own money & owns the silver will never be forced to get out of the silver position because of the silver market. Silver can go up, down or even stay at the same price. There is no interest to pay because you have not borrowed to buy it. No margin clerk will ever call nor will any broker call you because he has found a better investment.

You remain in complete control of your investment. No one can ever tell you to get out of it. Also, since the silver remains in your possession, there can be no possibility of a bank default that should affect you.

It has been valued since the beginning of time & at no time did it make more sense to own it than today.

About the company: Bullion Trading LLC accepts orders of any size and processes orders using the spot price. Bullion Trading LLC only sells from their active inventory and only stocks in-demand grain, coin and bar products. Come visit our website and see for yourself at: http://www.bulliontradingllc.com/index.php

Silver and the Minimum Wage

Many of us who write about the precious metals field have put out their 2009 forecasts and predictions for the New Year. This writer is no exception, but it seemed to me that it might be nice to look at my mission statement and determine if I could compose a simple story that might engage the reader to think about the current dire state of affairs in the economy and how an honest “money” system might help on an individual basis.

My mission statement is, “To teach and empower people to understand the benefits of an Honest Monetary System.” Although the words gold and/or silver are not even mentioned in my mission statement, they are both very important components in an honest money system—they instill trust. And the lack of trust is the core issue of today’s economic problems. Our banking institutions and well established investment firms do not trust each other, and the system is grinding down. This has even affected the “Big Three” automakers, who are experiencing problems in this economy . . . but it wasn’t always that way.

Looking back in time I found some very interesting facts regarding Henry Ford and the typical North American autoworker. On January 5, 1914, Ford announced that Ford Motor Company employees would receive a minimum wage of $5 a day, more than double the average pay available at that time. This date is just within days of the Federal Reserve Act that Congress passed during the Christmas Holiday in 1913. Basically, Congress relinquished its constitutional power and duty to “coin Money and regulate the Value thereof,” to a private banking cartel, the Federal Reserve System.

That action was a blatant overthrow of The Coinage Act of 1792, which had been signed into law by President Washington and defined the “dollar” as a coin containing 371.25 grains (troy) of fine silver. This Coinage Act of 1792 established the monetary system the Founders had outlined in the Constitution.

So, getting back to the Ford example, what would happen these days if Ford Motor Company decided to pay their employees 5 “honest” dollars a day? Could this be accomplished? For purposes of this article let us round a real dollar to 0.75 troy ounces of silver. Additionally, I am going to use 245,000 as the Ford employee base reported in September 2008 (Wikipedia).

Therefore 245,000 employees at $5 (~3.75 troy ounces, based on the Coinage Act) per day would be equivalent to 918,750 troy ounces per day! This implies within a one-month time frame (~22 working days) a total of more than 20 million ounces.

Of course if we check the data in 2006 (latest data available) we find the average pay per employee to be almost $29 per hour. From last week’s article we can see that the average price of silver for the year 2006 was about $11.50 per ounce. So, quite easily we might state 2.5 ounces per hour, or 20 ounces per day. Looking at the 2006 Ford Motor Company stats, using dirt-cheap silver, we have 107,800,000 ounces of silver in ONE MONTH!

This article can be taken several ways and that is the point—I want the reader to think. One area that gets very little attention in the mainstream financial press is that even mainstream political people are waking up to the problems. Just one example is shown in an excerpt below, from the Idaho Republican Platform:

“We believe the Federal Reserve Bank should be abolished and the issuing power restored to the people through their representatives in the U.S. Congress with the stipulation that the U.S. dollar be backed by gold and silver.” (Emphasis mine.)

So at a state level, people are beginning to realize that the system has failed them. And Idaho is not the only state; in fact Nevada and New Hampshire have tried in the past, and this week Senate Bill 453 was purportedly introduced by Greg Walker, a state senator from Indiana.

In conclusion, 2009 may turn out to be a year where one primary question is not so much who can we trust, but what can we trust?

It is an honor to be,

David Morgan

Silver News and Views

The Silver Institute just put out a press release which stated, “The silver price, per ounce, in 2008 averaged a strong US$14.98, a nearly 12-percent increase over the 2007 average price of US$13.38; the best average annual price since 1980. A key development in silver’s fortune has been renewed investor interest in the white metal, which began in earnest in 2004 and continues today, as illustrated in [this] chart.”

The Silver Institute’s Press Release also mentioned a Wall Street Journal article from last year (Dec. 31, 2008) which stated that silver is one of the ten investments to watch in 2009. Let me give a big public Thank you to The Silver Institute.

So as some have commented, on average the price of silver looks pretty good and as the chart above depicts we have seen five years of steady increases based on average annual prices.

Moving on I took a clip out of the January issue of The Morgan Report dealing with current news about silver. After publishing it was announced that Apple Computer may be one of the first to implement the use of silver zinc batteries in their laptops.

Silver News

The first issue of course has to do with the amount of silver that has come off the COMEX in December. Unfortunately, I cannot give an exact number, as this report needs to be finished prior to the final de­liveries being shipped. However, as of December 30, 2008, the amount of silver on the COMEX is roughly 127 million ounces and the only really noteworthy event is that more than 9 million ounces changed categories, as we reported earlier.

The Silver Institute reported that zpowerbattery.com has issued a statement indicating that silver-zinc batteries for laptop computers will be available in mid 2009. As stated many times, particularly during my speaking engagements, this will add to the demand side of silver, but it is also recyclable. Do not expect any noticeable increase right away, but as the safety, environmental, and longevity factors become better known, many laptop users will switch to this type of battery. This will also make its way into the cell phone industry at some point, in our view.

NanoMarkets reported that by 2015 approximately 185 million ounces of silver will be used by the electronics industry. The article goes on to state this is not surprising since silver is more conductive than copper, gold, or any other element. There were several references to silver in upcoming nano applications mostly dealing with silver in ink-based products.

The National Commodity and Derivatives Exchange Limited (NCDEX) in Mumbai, India, announced it will launch gold and silver futures trading on Monday, December 29, 2008. These contracts will trade in lots of 1 kg for gold and 30 kg for silver. The contract size has been defined at these levels because many of these contracts will be physically settled! So, we cannot rule out India’s long history of respecting silver as a store of value and prized for many of the same reasons gold is so favored in the Western cultures.

Finally, I would like to wish all readers a great 2009 and remind them that we have a special contest for all our members through the end of the month, click here for more details. Hint: Most computer users will really like this offer!

It is an honor to be,

David Morgan