07/07/10 Tampa, Florida – At breakfast I told the kids that I was instituting some new austerity measures around here, and they became so insistent that I heard all about how this was going to “ruin” them and their stupid social lives that I did not have to tell them that I was going to use the money to buy silver, which would have sent them ballistic.
The impetus for my New Mogambo Crusade (NMC) to acquire more silver came as a result of reading in Ed Steer’s Gold & Silver Daily where he noticed in the Comptroller of the Currency’s “Q1/2010 Report on Bank Trading and Derivatives Activities” that “the bottom-line numbers show that two US banks… JPMorgan and HSBC, USA hold between 97% and 99% of all the gold and silver derivatives held by all US banks.” Yow!
This is a result of naked short selling. Normally, to short something, you would have to borrow it from somebody, and then sell that. Now, to short gold or silver is as simple as getting somebody to pay money for a piece of paper that says it represents gold or silver. Easy! There is nothing behind it!
Of course, there are the slimy apologists who insist that while it is true, the shorts can simply buy back the paper gold or silver with cash, so everybody is happy.
It was this ridiculous comment that was the start of the now-infamous Mogambo Food Supply Program (MFSP) where I sold pieces of paper that promised “One complete, 5-course, home-cooked steak dinner,” and I only charged them one dollar! I took the dollar and invested the money in no-risk Treasuries.
Of course, business boomed, and any time anyone wanted to “cash in” their paper dinners, I would pay them with another piece of paper promising a complete, 5-course, home cooked steak dinner. Or, when they got tired of that scam, I would offer to pay them back their original dollar, while I keep the interest their money generated.
Of course, this Fabulous Mogambo Plan (FMP) was soon shut down, and my defense was that this is essentially the same scam that is going on – right now! – in the gold and silver futures markets!
This is not, of course, about how I am a soulless, greedy vulture who wants to make a lot of money in a hurry without actually working and using the actual workings of the futures markets and the stock markets and the bond markets as my business model, but about how JPMorgan and HSBC hold almost all the derivatives of gold and silver and, even worse, how this may actually be understating it.
Mr. Steer goes on “I want to qualify those percentages a bit, by saying that if a bank has a holding company [like Goldman Sachs does], any gold or silver derivatives held by them do not have to be reported to the OCC…and will not show up in this report. Right now the OCC reports that GS holds no derivatives in either gold or silver… but their bank holding company might… and there’s no way of finding that out.”
In fact, he goes on, “The other bottom-line number of interest is that the six largest US banks report holding 99.5% of all the precious metals derivatives in the US banking system.”
Now you know why silver, in serious short supply and evermore vitally needed, is selling for less than $19 an ounce right now, when gold is over $1,200! Using the last 4,500 years as evidence of their average correspondence, a gold-to-silver ratio of 15:1 means that silver should be $81 dollars an ounce! Right now! 426% higher!
And with the roaring inflation that is guaranteed because of all the money that the Federal Reserve is creating so that the federal government can borrow it and spend it, both silver and gold will be much, much, MUCH higher from here!
And if you have to cut the allowances of your own kids to get the money to buy silver, then trust me that the aggravation of them glaring at you all the time, and telling you how much they hate you, is a small price to pay to get more silver at such a low price, perhaps the Biggest Freaking Bargain (BFB) of the century!
And the best part is that it is so easy that I squeal in delight, like a hot pig in fresh mud, “Whee! This investing stuff is easy!”
The Mogambo Guru
for The Daily Reckoning
The Mogambo Guru
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo, click here.
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Whee!
What a BRILLIANT plan to NAKED SHORT SELL gold and silver. Think about it, there’s almost no downside to the “trade”. (I know, it’s hard to call it a trade when these firms aren’t even buying shares nor do they ever have intention of producing shares, only of fleecing the world).
Since gold and silver can’t go to zero or bankruptcy, they will never have to produce anything. And since the SEC and other regulators are in bed with Gov’t Sachs, JPHorgan and Shitibank these fleecers will NEVER be held accountable for breaking the rules. So “wheeeeee!” for them, making money is easy when you have the gov’t in your pocket.
GS, JPMorgan et al have launched a brilliant naked short selling scheme with gold and silver. Consider, where is the donwside?. It is a challenge to qualify this as trading when the corps in question do not ever plan to produce a share they short.
Since gold and silver will not ever zero out, JP, GS and others will never produce an ounce of anything, pretty much like the good they do for society, nil.
Wheee! Making money is easy when the government is in your pocket!
Has the historical ratio not dropped because silver has transitioned from “money” to “money/industrial commodity” much more than gold has?
I recall reading an article from Antal Fekete explaining that gold retained its “money” characteristic much more than silver because its annual supply/demand numbers are much lower than the over-ground stock (and hence more stable and adequate as “money/store of value”). The more silver is used industrially, the more it will shift away from real money and be more subject to supply/demand as any commodity… (and hence the ratio with gold will lose relevance)
Also if “JPMorgan and HSBC, USA hold between 97% and 99% of all the gold and silver derivatives held by all US banks” this should not be bullish for silver against Gold – since they hold both.. Also the actual sentence just means that the positions are concentrated on 2 banks – it has no indication of how big the actual global so-called “naked shorting” positions are….(ie 97% of not much is still not much!).. A bit of sophism here?…
The huge short positions will come crashing down when there are enough buyers of physical silver & gold to eliminate all of the above-ground inventories. That is when the spot prices will take off on a rocket trajectory.
And the cheat’s keep creating the average investor and Obama’s Administration alos benefits. Bed fellows of the same kind !!!!!!!
Silver is a good buy for now. I also recommend that everyone start buying canned food. The expiration date is 2013 so, when you buy a can of beans today for $1 & the price is then $1.40 in 2013, you have saved .40 cents & don’t have to pay capital gains.
This is what I am doing.
SilverMoon, buying some canned goods is a good idea, but silver will easily triple or quadruple between now [2010] and 2013. Buy silver now and sell to buy your food later. Please keep in mind that the Powers That Be will keep silver price-bound (see-sawing) between about $17.50 and $19.25 until people dry up the remaining inventories of physical metal which will cause a shortage. ONLY then will the experience of manipulation end and ALL short contracts will be absolved. This won’t matter, for the physical investor because silver will then trade in a cash-only black market. For certain, JPMorgan and friends who are doing the Governments bidding now will be immune from any judicial persecution whatsoever.
If inflation is guaranteed why is deflation a real possibility
I truly believe that the only way that this JP Morgan Chase manipulation will end (the HSBC position is practically nothing in comparison, and thus worth ignoring), or could end, is if and when JPMC executives at the high and mid-level, should receive death threats explaining why, and that these threats, after being ignored, are carried out against such JPMC executives all around the country. After a handful of assassinations carried out, I believe that other mid-level and above executives would put pressure on the board of directors to stop this silver scam/crime, and force them to cover most of their short position.
Otherwise, who’s to say that JPMC won’t keep shorting more and more, until they’ve finally shorted 500 million ounces, and the paper longs (most never want to take possession)finally give up and invest in some other type of paper. Why not a billion ounces while we’re at it? Who’s going to stop them? The CFTC? Of course not! The FBI? Of course not! Our government officials? No way! They’re colluding in this crime. Unfortunately, I see the 2nd amendment rights being enforced, as mentioned above, as the only way to stop this extreme crime and the arrogance that they’ve demonstrated against we the people.
hariprem,
As I understand it, most modern-day economists fall into one of two different schools of thought–the “Keynsian” and the “Austrian”. Each defines inflation and deflation differently, which leads to a lot of confusion. A “Keynesian” considers inflation and deflation to be a general increase or decrease in prices. An “Austrian” defines inflation as an increase or decrease in the money supply which ultimately results in an increase or decrease in prices.
“Austrians” contend that inflation (an expansion in the money supply) has already occurred and will continue to occur for the foreseeable future. This is primarily because of all of the borrowing and printing that has been required and will continue to be required by the federal governments and central banks in order to fund the bailouts, stimulus packages, deficit spending, unfunded liabilities, etc. As all of this extra money that has been and will be created circulates, prices will increase–it just takes time.
“Keynsians” contend that inflation (an increase in prices) has not occurred and fear that deflation (a decrease in prices) will occur. In order to avert a decrease in prices they argue that the economy needs more stimulus–in the form of even more government spending and debt as well as low interest rates.
It’s important to consider that while the overall money supply influences prices, under normal circumstances the supply and demand for a particular product or service are normally the two primary factors that determine its price. “Keynesians” want to avoid deflation (a decrease in prices) by increasing or stabilizing the demand for products and services by keeping interest rates low. As more loans are taken out the money supply also continues to increase and further contributes to price increases.
So it’s impossible to answer your question because, it’s the “Austrians” that are saying that “inflation is guaranteed” and the “Keynsians” that are saying that “deflation is a real possibility”.
Lock and load on US Silver Eagles..
I just bought a bunch of Sterling Silverware.
Which is better, pre 1935 silver dollars or new Silver Eagles? Could the new be confiscated?