Buy Silver Bullion Coins

Jim Willie CM
www.marketoracle.co.uk
A love affair with silver is so natural. The fundamentals are astoundingly positive and bullish in price prospects. My basic argument has been repeated many times. Industry has countless uses for silver, significant demand. But industry has only miniscule isolated uses for gold, in trivial demand. So silver wins on the Demand side of the equation. Central banks own a huge amount of gold. They frequently sell it, even through their slippery surrogate the Intl Monetary Fund. Central banks own zero silver. So silver wins on the Supply side of the equation.
My motto is that gold fights the major political and financial war, but silver will ride in on a shiny white horse and take much larger spoils. That effect has already begun. Since the significant game changing FOMC meeting on September 21st, where the telegraph message delivered to the world financial markets was made by megaphone, the impact has been clear and stark. Compared to closing prices on September 21st versus October 29th, just five weeks, the silver price had risen from $20.64 to $24.56, up 19.0%. During the same timespan, the gold price had risen from $1274.30 to $1357.60, up 6.5%. My claim, a loose forecast often repeated, has been that the silver breakout gains would be at least double and possible triple the gold gains. We have seen exactly that in recent weeks.
An extremely fuzzy factor is the CFTC attention. The Commodity Futures Trading Commission is supposedly investigating the Big Four Banks for gigantic concentrated short positions in the silver market, for naked shorting of silver, and for collusion with other banks. Commissioner Bart Chilton has made a lot of noise, but has done next to nothing. Some find encouragement, an absurd notion in my view. Let me know when court injunctions are slapped at JPMorgan. Several class action lawsuits against JPMorgan have begun, also encouraging, but unclear on substance. They crop up every couple weeks, the latest citing a RICO aspect. Let me know when the full force of the USGovt regulatory bodies order JPMorgan, Goldman Sachs, Citigroup, and Bank of America to liquidate even 10-20% of their short positions. Unless and until such action occurs, the CFTC chirping is just that, noise from the menagerie of obedient pets who work on short leashes at the behest of bankers. Mail room clerks do not give orders or make demands to the executive suites, not now, not ever. The regulatory chiefs are mere squires to the bankers, and will follow orders, not give them. By the way, the Big Four positions are naked short positions in all likelihood. They are immune from posting collateral, as required by the metals exchanges. So they routinely sell a stack of silver whenever the price moves have been made, like in the wee hours this Wednesday and very early at the New York open. Good Morning New York resulted in almost a full $1.00 drop in the silver price, undoubtedly another naked short raid before the QE decision by the US Federal Reserve and its statement. The full impact of the ambush decline was reversed by afternoon. Right before important events deemed negative nasty to the USDollar, the Big Four go wild with naked shorts, called ambushes. The evidence, the trails, the fingerprints are easily seen except by blind men, official gold industry wonks, and USGovt regulators.
SUPPLY & DEMAND BASICS
Silver total demand was essentially flat in 2009 versus 2008, as the world adjusted to a mammoth meltdown late in 2008. During the extraordinary disruptions, disturbances, and sudden insolvencies, JPMorgan liquidated much of the inherited (commandeered) precious metals accounts from Bear Stearns and Lehman Brothers. In the case of Bear Stearns, a solid argument can be made that they were targeted for kill due to their long gold account. In the case of Lehman, they were targeted fro kill in order to consolidate the power structure in the twin monoliths at JPMorgan and Goldman Sachs. On silver demand, the bulk of the 11.9% decline in the 2009 fabrication demand was primarily driven by the global financial crises. The reduced drop in industrial requirements was the lowest level since 2003. Total fabrication demand totaled 729.8 million oz and industrial demand was 352.2 million oz in consumption. Much of the decline in factory demand was attributed to the car industry.
Implied net silver investment increased by a staggering 184% to 136.9 million oz last year, reaching its highest level in 20 years. Overall jewelry demand fell slightly by 1.1% in 2009 to 156.6 million oz, a testament to the historical norm. It falls with a bull market, not to contradict it, but to confirm it!! That is the opposite message, contrary to what the official gold industry propaganda preaches. In fact, India and China posted increases in jewelry demand last year, outside the global trend. Silverware demand rose by a decent 4.6% to 59.5 million oz, largely due to a surge in Indian fabrication. Their middle class grows impressively.

As for supply, the silver mine production rose by 4.0% to 709.6 million oz in 2009. Gains came both from primary silver mines and output from mining by-product. The strongest growth came from Latin America, where silver output increased by a hefty 8%, the biggest gains logged in Argentina and Bolivia. Again Peru was the world leader in silver production in 2009, followed by Mexico, China, Australia, and Bolivia. All of these countries saw increases last year except for Australia, where output was dragged down from the lead/zinc sector, with the by-product impact. Some mines are devoted solely to silver targets, called primary silver projects. Global primary silver output saw a 7% increase in 2009, accounting for 30% of total mine production last year. The cash operating costs for primary silver mines remained relatively stable, rising by less than 1% to $5.23/oz in 2009. The big story is the huge decline in net silver supply from above ground inventory stocks, which were reduced by 86% to 20.2 million oz in 2009. The drawdown was driven mostly by the surge in net investment, higher de-hedging (the active reduction in forward sale contracts), lower government sales (like official mints), and a drop in scrap supply. The scrap supply came down by 6% from 2008, enough to register a 13-year low of 165.7 million oz. It was the third consecutive year of losses in the scrap category. Government stocks of silver, the feeder in official coin mint programs, fell by an estimated 13.7 million oz last year, to reach their lowest levels in more than a decade. Data was supplied by the Silver Institute (SEE LINK).

Kevin McElroy
November 1, 2010
www.seekingaplpha.com
Legendary commodity investor and hedge fund manager Jim Rogers recently pointed out that silver prices are 50% below all time highs.
He's talking about the brief momentary highs of nearly $50 an ounce back in 1980. With silver currently selling for less than $24 an ounce, Mr. Rogers is technically correct. But priced in 2010 dollars, the inflation adjusted high for silver would be closer to $124.
So if you believe that silver prices will make new inflation adjusted highs, then you're expecting to see a five-fold increase in the price of silver.
Silver has already trounced just about every other asset so far this year - it's up 40% since January 1st.

I believe that silver is due for a correction. If you've read any of my articles this week, you've heard me talk about Ben Bernanke and the upcoming Federal Open Market Committee (FOMC) meeting where he will announce the next round of Quantitative Easing.
Ben's announcement could strengthen the dollar, which would be bearish for all commodities, not just silver. As I said, silver is due for a correction.
Bernanke's announcement could be a catalyst for silver prices to drop 5-10% in the short term.
That would create an excellent buying opportunity for people like me, who are long term bullish on silver.
I'll be bullish on silver as long as the Federal Government keeps interest rates absurdly low, and as long as huge amounts of government debt is the only realistic option to keep paying for all the bells and whistles that politicians promise voters and constituents.
But there's an additional wrinkle in the silver story that I think could give silver an additional, long-term boost...
For years and years, silver prognosticators and analysts have talked about silver price manipulation. In short, the long-running conspiracy theory is that a handful of global banks have placed massive short-side bets in order to manipulate the price of silver.
Well, it's not a conspiracy theory anymore.
According to a recent story in Bloomberg,
At a hearing in Washington on Oct. 27, CFTC Commissioner Bart Chilton said there have been ‘fraudulent efforts to persuade and deviously control' silver prices and that violators should be prosecuted.
If you're not familiar with the Commodity Futures Trade Commission, they're the Federal Government body in charge of regulating and monitoring all commodity futures transactions on exchanges in the United States.
They run a pretty tight ship, so it will be surprising if they let any of the offending parties in this manipulation scandal off the hook easily. So what's the upside for manipulating silver futures contracts?
It's a little complicated, but these banks were placing phantom or "spoof" orders on silver contracts with the intention of skewing prices of options contracts.
The effect, allegedly, is that these spoof orders made some options worthless while boosting the value of other options.
In any event, these "spoof" orders had the supposed consequence of keeping silver prices artificially low.
In light of the announcement from the CFTC that they believe the price has been manipulated, I think we can see an additional boost as short-side orders are either cancelled and/or filled by the offending parties.
When you take a short side bet and you're wrong, when the options contract expires, you have to buy the security at current prices. The additional volume usually spikes the price further to the upside.
Now that the CFTC is on the case, I'll expect silver to continue to make new highs.
It still has quite a bit further to go before it hits inflation adjusted highs - but as I've been saying: wait for Bernanke's announcement next week to add to or build a position in silver.

It was just announced late Wednesday that two lawsuits have been filed in Manhattan federal court against JP Morgan and HSBC Holdings Inc. accusing them of manipulating the price of silver by "amassing enormous short positions". The suits were filed by Brian Beatty and Peter Laskaris, who each claim they lost money trading COMEX silver futures and options contracts as a result of JP Morgan's alleged manipulation.
 
In NIA's latest documentary 'Meltup' that was released on May 13th, 2010, and has now been viewed by over 855,000 people, NIA's President Gerard Adams exposed the manipulation of silver that has been taking place by JP Morgan. Mr. Adams discussed in detail in 'Meltup' how on March 14th, 2008, the very day Bear Stearns failed was the same day silver reached a multidecade high of about $21 per ounce. According to Mr. Adams, Bear Stearns was on the verge of being forced to cover their naked short position in silver, which could have quickly sent silver as high as $50 per ounce. This would have caused a loss of confidence in the U.S. dollar and a possible currency crisis. Instead of allowing this to happen, the Federal Reserve orchestrated a bailout of Bear Stearns and JP Morgan acquired their assets with the backing of the Fed. Shortly after taking over Bear Stearn's silver short position, JP Morgan was able to manipulate the price of silver down to below $9 per ounce.
 
NIA exposed in 'Meltup' that JP Morgan was short 30,000 silver contracts representing 150 million ounces of silver. This is one of the largest concentrated short positions in the history of all commodities, representing 31% of all open COMEX silver contracts. NIA found it shocking for this type of a concentrated naked short position to exist in the very metal that the U.S. constitution defined as real money. What NIA found especially frightening is how almost everybody in the mainstream media has ignored and continues to ignore this issue. Not one article in any major financial publication has even questioned why JP Morgan is allowed to hold such a large short position in our nation's single most important commodity.
 
On February 5th of 2010, when the price of silver was manipulated by JP Morgan down to below $15 per ounce, NIA said, "this is a once in a lifetime entry point for those wishing to go long silver at a bargain basement price". On that day, NIA's President Mr. Adams purchased 1,300 January 2011 $20 call options in the silver ETF at $0.89 per contract and on February 8th, NIA announced his purchase and said to NIA members, "NIA is betting big that this past week's short-term decline in the paper price of silver was just a temporary wash out, before a huge surge in silver prices later in 2010."
 
On July 28th with the price of silver at $17.63 per ounce, NIA released an article entitled "Gold and Silver Capitulation is Near" in which it said, "The sentiment on gold and silver has abruptly changed to the negative like nothing we have ever seen before and to us this means the big move to the upside is right around the corner." Since NIA's July 28th article predicting silver's big move to the upside was right around the corner, silver has rallied as much as 41% to a high on October 14th of $24.92 per ounce. On October 14th, the very day silver reached its high, Mr. Adams sold his silver ETF call options at $4.25 per contract making a gross profit of $436,800.
 
Silver, at its current price of $23.69 per ounce, is trading for only 1.78% the price of gold. We have a gold/silver ratio of 56, despite the fact that only ten times more silver has been produced in world history than gold. On December 11th, 2009, NIA declared silver the best investment for the next decade. On December 21st, 2009, in NIA's top 10 predictions for 2010, NIA predicted a sharp decline in the gold/silver ratio, which was 64 at the time. NIA was right, the gold/silver ratio has declined by 12.5% so far this year.
 
Silver possesses all of the same monetary qualities as gold, but silver is also used for countless industrial applications. 95% of all silver produced in world history has been consumed. World silver inventories have declined from 10 billion ounces in 1940 down to only 1 billion ounces today. Meanwhile, almost all of the gold mined in world history remains in the form of bullion bars stored in vaults. The world has approximately 2 billion ounces of gold inventories today. The total value of the world's gold inventories is currently $2.656 trillion compared to the total value of the world's silver inventories of $23.68 billion. This means the value of the world's gold inventories today is worth an unbelievable 112 times more than its silver inventories.
 
China has been rapidly diversifying their foreign exchange reserves into gold in an attempt to position the yuan to be the world's next reserve currency. Despite China increasing its gold reserves by 76% in recent years to 1,054 metric tons, the value of China's gold reserves still only account for about 1.5% of its total foreign exchange reserves compared to the average nation of 10%. China needs to rapidly increase its gold reserves this decade, which NIA believes will send gold not just to new nominal highs, but also to new all time highs adjusted to the CPI and the real rate of inflation.
 
No central banks in the world currently own silver. Imagine if just one central bank of any major country announces a large silver purchase. The world is only producing 709.6 million ounces of silver per year worth a measly $16.8 billion. Total annual silver demand for industrial applications alone is 352.2 million ounces. Once you include photography, jewelry, silverware, and coins & medals, total annual silver demand is already 729.8 million ounces, which is greater than silver production. If a central bank decides to purchase silver, the market is so tight that silver prices could literally rise to $50 per ounce overnight. NIA estimates that $50 per ounce silver would mean approximately $4 billion in losses to JP Morgan.
 
NIA applauds CFTC Commissioner Bart Chilton for taking the time to publicly comment on Tuesday about the precious metals markets and in particular the silver markets and acknowledging that the public deserves some answers to their concerns that silver markets are being, and have been, manipulated. Mr. Chilton said in a statement, "I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told by members of the public, and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted."
 
On September 9th, after JP Morgan announced that they would be winding down their proprietary trading operations and laying off their 20 proprietary commodities traders, who NIA believes could be responsible for the current manipulation in silver, NIA released an article entitled, "Is JP Morgan's Silver Manipulation Over?". NIA said in this article that it was "hopeful but skeptical that the manipulation is coming to an end" and "We remain cautiously optimistic at this time." Since this article, it appears as though silver has been trading based on free market forces for the first time in many years. There have been no noticeable attempts to drive down the price of silver through manipulation.
 
NIA's most recent silver stock suggestion from September 20th gained 111% in just 17 trading days and its previous silver stock suggestion from July 28th gained 111% in 47 trading days. We are very happy that investors who have for years been suffering due to JP Morgan's manipulation, are now finally seeing the value of their silver investments rise to where the free market wants them to be. The efforts of all NIA members to expose JP Morgan's illegal activities are now paying off big for all Americans.
 
NIA members should be proud of themselves, but the fight is not over yet. Although most NIA members have been prospering and are now positioned to not only survive but thrive during U.S. hyperinflation, we still need to work together to prevent a complete societal collapse so that our country is still worth living in after the U.S. dollar becomes worthless. We hope to release our new documentary 'End of Liberty' this Sunday on Halloween. After you watch 'End of Liberty', it is important for you to not only spread the word to your family members and friends, but we strongly urge you to contact all relevant web sites, blogs, newspapers, magazines, and television and radio shows, telling them about the movie. 'End of Liberty' is quite simply the most important firm ever produced in world history.
 
If you would like your family members and friends to be the first to see 'End of Liberty', please tell them to become a member of NIA for free at http://inflation.us