Buy the Dip: Silver's on Sale!
Silver Stock Report
by Jason Hommel, April 14th, 2009
Let's review the
fundamentals of gold and silver.
The world gold mines produces 2500
tonnes per year, which is about 80 million ounces. With gold at
$867, that's $69 billion worth of gold mined each year. That's a
tiny market in the scale of world finance, where the USA has $14,000
billion in the US banking system at risk, and has added $11,000 billion of
commitments in bail outs, and continues to issue $800 billion bail outs
with increasing regularity, with a total budget exceeding $3000 billion,
and a budget deficit approaching $1500 billion.
silver market is a lot smaller. Way smaller than the $69 billion in
gold produced. World silver mines produce about 600 million ounces,
at $11.88/oz. is $7.1 billion. Unlike with gold, where 95% of demand
is for investment purposes, most silver has industrial applications, and
there is little relative investment demand. Investment demand in
silver is about 10-25% of the market, perhaps headed towards about 150
million ounces per year now, rapidly increasing in 2008, and in 2009
now. 150 million oz of silver, at $11.88 = $1.7 billion
Gold Eagle production is 710,000 oz., while Silver Eagle
production was about 20 million ounces for 2008. The silver Eagle
market is thus only a $237 million market, extremely tiny in the scale of
Large banks burp up errors in size that
are orders of magnitude more than that, regularly. Large banks
have "losses" up to ten to twenty times the size of the silver Eagle
market, every quarter. The size of fraud in financial markets
remains unimaginable, and will be incomprehensible to historians of the
The scope of fraud in the silver market alone is
staggering; frauds such as:
Mints who claim they both have a
capacity of 50,000 oz./day, yet are backordered from 3-6 months. Any
such mint should be making as many rounds as the U.S. Mint makes (50,000 x
365 = 18 million). Nobody is doing that in our market, trust
me. Thus, their "backorder" is indicative of floating on customer
Another mint with a 50,000 oz per day capacity is the Golden
State Mint in LA. see www.goldenstatemint.com
Yesterday, I ordered 5000 more oz. of our "LOVE GOD" round, which they
were able to produce and ship out, in ONE DAY, presumably, because they
had already manufactured the blanks with silver I've had on account with
them. It's wonderful to find an honest businessman in a sea of fraud
Another fraud that I suspect in the silver market
is the Silver ETF. I just don't trust that they have the silver;
they obtained too much too soon, and their silver custodian is the least
trustworthy bank in the system, JP Morgan, who has also been identified as
the largest holder of silver short positions on the COMEX, who also has a
large short position in the over the counter markets.
JP Morgan is
also an LBMA member with the largest derivatives up to $80 trillion!
The BIS, the Bank of International Settlements admits that "non
gold precious metals derivatives" are $190 billion, and these are mostly
held by JP Morgan, the 800 pound gorilla in the derivatives market.
Presumably, that would include silver, platinum and palladium.
platinum and palladium world gold production figures are each about 8
million ounces. Platinum, at $1206/oz., is a $9.6 billion annual
market. Palladium, at $231/oz. is a $1.8 billion market.
Therefore, the $190 billion in over the counter "other precious metals"
derivatives must be mostly silver, or mostly fraud, since silver is only a
$7 billion market!
Basically, I believe 90% of the silver fraud is
being perpetrated by JP Morgan, and maybe up to 50% of world
financial fraud is being perpetrated by them, too.
way to avoid the fraud, and best take advantage of it, is to buy real
Real silver is very rare, highly desired, and is destined to have
its true scarcity and value revealed as frauds collapse