Trading Alert

FYI for my friends only. The “Critical Mass Guy” has just issued a trading alert today, Wednesday. In part he says:

I am hereby recommending that you immediately enter into a short position with one-half of your core capital relative to the DJIA index. This can be done by using ½ of your core capital to purchase the single inverse ETF DOG. The last trade on this is around $67.60 and you can simply purchase these via a market order since they are very liquid.

Although the model has not yet reached critical mass readings, my technical work is showing extreme danger right now. I am not recommending any purchase of options at this time but will likely be doing so soon.

I plan to do this myself tomorrow morning. However, I will probably use the Ultrashort DOW 30 (DXD) ETF as it provides almost 2X leverage. (As of tonight, YTD it has provided 1.78 the return of DOG.)

◊◊◊◊ Now: Gold @ $816.30, Silver @ $13.28, USDX @ 76.79 ◊◊◊◊
◊◊◊◊ Now: DJIA 11,417.43

“The Hunts Tried to Corner the Silver Market” Myth

…and why there are some eerie similarities to today’s obvious silver/gold price manipulations.

Some excerpts from an article by David Bond, editor of The Silver Valley Mining Journal.

We remain amazed, 18 years later, that supposedly sophisticated investors regard the events of 1979 and 1980 as “that time when the Hunts tried to corner the silver market.”

This is one of those monster myths that is so incredible and so false it must be believed by the unwashed masses. Regrettably, detritus of these masses grow up to be Presidents of the United Snakes, or of some branch of the Federal Reserve Bank. Makes them no less idiots, their Ivy League pedigrees notwithstanding.

In 1977, Bunky Hunt surveyed a battlefield much as the one that confronts us: there was paper silver a-plenty for sale, but not a physical ounce in sight. Hunt and his brother, reared in the resource-rich ethic of mid-Texas and Oklahoma, saw a gaping hole in the illusion that is American wealth: a bunch of paper selling a commodity that could not be bought. These things occur from time to time in corn, soybean, and oil commodities, but only temporarily until the market quickly achieves contango – its balance. The only time a gaping imbalance between the paper and the physical market is allowed to persist, the only time the paper price is allowed to be lower, and lower for a long period of time, than the physical price of the commodity, is in the trading of silver and gold.

It is useful for a government like the one that has commandeered the United Snakes, such government and its banks, to permit such an imbalance to exist. If the paper price of silver and gold are severely lower than their actual value, the paper money that the United Snakes and its banks issue is theoretically more valuable – relative to silver and gold – than it really is. Push down the metals, up goes the U$ Dollar. This is our current situation.

And it is profitable for the United Snakes government until some kill-joy comes along and wants delivery. The Brothers Hunt saw that the absurdly-priced silver contract of $3.50 an ounce was a bargain, that $3.50 silver existed nowhere in the real world except in the paper futures pits, but there it was, for sale, on the Comex.

My late friend, Paul Sarnoff, watched the thing unfold from his front-row seat at Paine Weber. The Hunts were a client, as was a Catholic archdiocese and several Arabs, who were getting worried about the quality of the paper they were being paid for their oil. Put yourself back in those times: gas prices were going through the roof; home mortgages, if you could get one and had perfect credit, were going for 18 percent APR; we had a weak President facing unpopular situations in Iran (where there were hostages) and Afghanistan (where the Russians were being adventurous). There was a run on the U.S. dollar in Europe.

And there was no silver. Not since the United Snakes had kicked silver out of the U.S. monetary system had silver been more scarce. Yet there it was, for sale on the Comex, for sale by the likes of the big central banks and bullion banks of the world. But such was no big deal. Between 97 and 99 percent of those 5,000-ounce silver contracts were settled in paper.

But the Hunts and their friends – this was in 1977 – began buying this paper over a period of years. By October 1979, the Hunts and their pals had bought up the bullion dealers’ paper positions to the tune of 192 million ounces. Nelson Bunker Hunt owned 79 million ounces of silver – on paper; William Herbert Hunt, another 48 million ounces; their pals, including the Arabs, another 65 million ounces.

Is it too much to ask, if you buy a car from a guy, and you pay him the cash and he signs over the title, that you might get the car? This, ladies and gentlemen, is all the Hunts ever asked. They did not ever “corner” the silver market. All they asked was for the bullion dealers to keep their promises, and deliver.

Chaos ensued. There was then – as there is now – no silver to be had. Not in London or New York warehouses nor in the ground. Not anywhere. And for the simple reason that the Hunts and their pals asked for the delivery of silver they were promised by contract, they were vilified. Driven to ruin.

This writer carries no cross for the Hunts. But there is a monster short position in silver again. It probably exists to prop up the Bush puppetry until the November election. Presidential election years are always hard on metals and easy on mortgage rates, except this year, the mortgage market is done, so new paradigms are in the making. Metals may come back far sooner than is ordered by the Fed and the FDIC. And remember, here is no Jimmy Carter to sell a billion ounces of silver into the market to quiet the Dollar worries. Carter’s still around, but those 1 billion ounces are long gone.

The Hunts shook the lying bankers to their boots – to the point where intervention by the Fed, Treasury, and the Defense Department were warranted – merely by asking for delivery of the 192 million ounces of silver they’d been promised. This was not a “cornering” of a market; it was the attempt to enforce a contract, same as you’ve got with your landlord or bank.  

So let’s all of us be Hunts. Ask delivery of $12.80 silver and $790 gold, today. There are 300 million of us. A single ounce of physical silver for every man, woman and child in the United Snakes would squeeze these rat-bastards harder than the Hunts could ever do. There were two Hunt brothers in 1979. There are 300 million of us in 2008. Even in this country, there aren’t enough jail cells to hold us all. And we could take their pants off, once and for all. 

  

Can I have an “amen?”

Read that first italicized paragraph again: in 1979-80 the US Gov’t allowed the manipulation of gold/silver as a means to support the US dollar. And, now they’re doing it again.

This explains WHY the CFTC is looking the other way on the ongoing and massive price manipulations. I surmise our very own PPT (Plunge Protection Team) is behind this. These are the same guys who are actively propping up the stock market. They’re pulling out every trick they have to support the dollar long enough to inflate away the National Debt and other US obligations. This is one of their strategies to delay the flight from the dollar–they don’t want traditional alternatives like gold and silver to appear more appealing than the dollar.

But the dollar’s reserve currency standing is more threatened today than it has ever been. There will come a time when the dollar cannot be supported above 70. They will have to let it settle to 62 and battle to keep it there. Then, as Jim Sinclair says, they’ll have to allow it to slide to 52 before defending it again.

Can they support the dollar indefinitely?

No.

If they could they would have kept it above its multi-decade low of 80, but they couldn’t. They had to let it drop to 72 before defending it.

And, as the dollar drops, as the market drops, as the financial outlook looks more bleak, people will panic. When inflation becomes widely recognized, people will realize they can’t afford to keep their savings in a bank account. Then what? Grab that store of wealth that’s been relied upon for centuries: silver and gold.

Remember this:
In 1808 you could buy a nice men’s suit for an ounce of gold.
In 1908 you could buy a nice men’s suit for an ounce of gold.
And, in 2008 you can still buy a nice men’s suit for an ounce of gold.

Silver and gold hold their value. Paper currency does not. In the last 400 years the only paper currencies that have not hyper-inflated to their true value of zero have been the ones around today. It’s only a matter of time before they follow their fiat brethren into the flushing toilet of history.

◊◊◊◊ Now: Gold @ $809.00, Silver @ $13.07, USDX @ 77.13 ◊◊◊◊