Buy Metals at Bargain Prices By Patrick A. Heller @numismaster.com

Buy Metals at Bargain Prices

By Patrick A. Heller September 27, 2011

From last Wednesday’s COMEX close into Asian market trading this Monday, the price of gold dropped more than 14 percent, its largest four-day price drop in the past 30 years. The price of silver tumbled more than 35 percent over the same period.

I am aware that gold and silver prices might fall by a noticeable percentage at any point, as that is an event that occurs from time to time. However, I was not looking for it to happen now and not to the extent that it occurred.

At any time it is a fair question to ask if gold and silver markets have peaked. Many customers are now asking me this question. Even more are asking me if these suddenly lower prices are a buying opportunity and if the bottoms have been reached. So, let’s look at these questions in terms of hard news and speculations about what might be going on.
Last Wednesday, the Federal Open Market Committee made its announcement at the end of its regularly scheduled two-day meeting. The most significant detail in its statement was that the Federal Reserve would be replacing $400 billion of shorter maturity (up to 3 years) U.S. Treasury debt with the same quantity of longer term issues (6 to 30 years maturity). While this shift to longer maturities had been anticipated, the announcement of simply replacing total debt without inflating the money supply (also known as quantitative easing) took analysts and investors by surprise. In the absence of a formal announcement of further inflation of the money supply, investors became even more nervous about further declines in stock prices.

Last Thursday, the COMEX announced an increase in margin requirements for leveraged gold and silver accounts. Increases in margin requirements make sense as prices are rising, as that helps keep the market in order, but it does not make sense when prices are falling. At the time of the announcement, the price of gold was already down more than 6 percent from its early September high. Silver was then down 20 percent from its late April high. Consequently, the margin hike was not done to maintain orderly markets. Instead, it was a deliberate move to help knock down gold and silver prices.

As stock market prices fell Thursday and Friday, some of the technical signals turned more negative than when Lehman Brothers failed in 2008. This could have led to a panicked exodus from U.S. stocks into other assets such as precious metals and other commodities.

The decline of gold and silver prices late last week almost certainly scared some investors away from pulling their holdings out of U.S. stocks. This investor fear that a “safe haven” asset might not really be safe was reinforced by the overall decline in a large number of commodity prices.

In early September, gold leases up to three months maturity turned to negative interest rates. That meant that a party leasing gold would not only not be charged any interest, the lender would actually pay money to a party borrowing the gold. Late last week, the six-month gold lease rate also turned negative. At the beginning of last week, the interest rates on silver leases up to three months maturity also turned negative. These are not normal market conditions. Typically over the years, negative lease rates have been tied into efforts to suppress gold and silver prices by artificially forcing physical metal onto the market. This gives the appearance (though not necessarily the reality) that there is more supply of physical metal, which intimidates potential gold and silver investors.

Earlier this month, Deutsche Bank CEO Josef Ackermann said, “It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking books at market levels.” Several of the major banks are literally on the brink of collapse if they had to absorb losses on the government debt they hold. European central banks have to do something to contain this massive problem, but they have not been able to agree on which measures to take. I’m sure more hard news will emerge in the coming weeks as to what transpired over the past few days to knock down gold and silver prices. Without knowing just what further information will come out, let me now speculate on other possible events that contributed to the decline in precious metals prices.

First, it is entirely possible that European central banks of nations in the eurozone could be liquidating some of their gold reserves as a desperate move to beef up their fiat currency reserves to stave off default on their debts. If this is happening to any degree, that could help explain the why short-term gold and silver lease rates have recently turned negative.

Second, it is possible that the U.S. government may have informed the Chinese government in advance that is was preparing a major intervention to suppress gold and silver prices and asked the Chinese to refrain from jumping in to purchase physical metals until the market had been pushed near the bottom.

Last week a longtime reliable source told me that there were massive quantities of Asian buy orders placed in the London market to execute if spot prices dropped to $1,760 all the way down to $1,715. I have every reason to believe that at least a sizable percentage of these buy orders may be have placed by the Chinese government as this would be consistent with their trading activity since 2003. If the Chinese were alerted that they could have the opportunity to purchase gold even cheaper than their standing buy orders, it would be reasonable for them to cooperate by putting their buy orders prices in the $1,700s.

Third, it is possible that the U.S. government may have directly intervened in suppressing prices, through one or more agencies that are not drawing close scrutiny from Congress or the public. The prime suspect would be the Exchange Stabilization Fund, which was established in 1934. The ESF is an emergency reserve, not subject to congressional oversight, normally used to intervene (manipulate) in foreign exchange markets. In 1970, its mandate was changed by Congress to allow the Secretary of the Treasury, with the approval of the President, to use funds in the ESF to “deal in gold, foreign exchange and other instruments of credit and securities.” Thus, it would be possible and legal for the U.S. government to surreptitiously manipulate the gold market. The reason I consider this to be a plausible reason that gold and silver prices were suppressed is that the major beneficiaries of lower prices would be the U.S. government, its trading partners and allies.

On the basis of the hard information available early this week, it is highly likely that gold and silver prices were pushed down rather than fell as a result of free market trading. As I prepare this Tuesday morning, the price of gold is already up more than 7 percent from the bottom it touched in Asian markets early Monday, and silver is up more than 25 percent. Investor sentiment is not that volatile. You just don’t have gold and silver plummet then quickly rebound by such large amounts. However, manipulated markets can be that volatile.

The enormous global financial problems have not been cured in the past few days, so there is no reason to anticipate that gold and silver prices have peaked. However, I now think it will it will take a few months more for gold and silver prices to reach far higher levels than I had previously forecast.

What that means is that I regard the current gold and silver prices to be a temporary bargain buying opportunity. Because of the significant decline, it may even be worth accelerating purchases if you are normally one who purchases over time using the dollar cost-averaging approach.

As prices dipped toward the end of last week, we saw a significant increase in trading activity by both buyers and sellers. The action in gold has roughly balanced, while there has been much stronger demand by people to buy silver rather than liquidate. Because of the volatility in the market, wholesalers are effectively using two-tier spot prices where they are a buyer at one number and a seller at a higher spot price. With such strong demand for physical silver, it looks like delivery times for some forms are already slowing down.



Written By Patrick A. Heller Click here for more...

The Long Conversation By Cognitive Dissonance @ZeroHedge

                               The Long Conversation

By Cognitive Dissonance

The Long Conversation

By

Cognitive Dissonance

It was during my preparation for the Roman Catholic Church’s rite of passage called Confirmation, the point where I commit to the present insanity because I have supposedly reached the age of consent, when I learned I had just blasphemed. This was a terrible state of affairs according to the nun who was presiding over my religious indoctrination. Back then, while the Priest may have been the anointed one and thus the public face of local parish power, the nuns ruled the roost and thus administered the religious training as well as its mind control counterpart, corporal punishment.

As the sister repeatedly slammed her heavy wooden ruler down on my knuckles, and the back of my hands quickly turned red and swollen in protest of another round of religious abuse, aside from the sharp pain what I really felt was deeply confused. What had I done to deserve another beating, aside from asking Sister Elizabeth a few innocent questions? As the other boy slaves watched in horror and fascination (the girls received their own special instruction two doors down) it would be nearly a decade before I fully recognized that logic and free thinking is the enemy of social conditioning and religious indoctrination.

Well north of forty years later I can still feel the psychological sting of that abuse as I revisit the incident in my mind and once again color outside society’s line. Pavlov would be proud to see that my conditioned response had been beaten so deep. But it’s not the individual beatings that have so much of an effect, but rather the cumulative piling on that reaches such depth. And therein lay the secret of their total control, for there appears nowhere to hide to escape the raining of their blows. This is their best and most effective lie. But it is still a lie nonetheless.

It was an innocent question really, and a tribute to its power and destabilizing logic that Sister Elizabeth turned bright red and immediately reached for her punishing stick. In my defense it was during that same week in American History class, the location where the state administered its own form of mind control and corporal punishment, where I learned how those filthy dirt-worshiping Indians (Sister Elizabeth’s words, not mine) honored dozens, even hundreds, of holy spirits. All I wanted to know was why we only had one. It seemed to me that we were getting the short end of the stick, the phrase my father liked to use when he applied his own punishing stick.

The Punishing Sticks

Can you hear them way off in the distance talking among themselves, the voices of the great spirits past, present and future, all speaking as one? I most certainly can and to be perfectly honest I always could. I just didn’t understand what it was I was listening to since the ability to decipher them had nearly been driven out of me ages ago. So I ignored them for as long as I could until finally I could no longer.

Once you let them in there is no turning back, and we all understand this as irrefutable fact. Once it is recognized, we can no longer deny our inner knowing. The voices might be faint and even a bit blurred, but still very understandable to those who care to listen. Or dare I say it, even to confer. In fact if you put your ear to the wind, close your eyes and settle your mind, you can hear them whispering to each other while beckoning us to rejoin them in our collective Long Conversation.

The thing about our shared insanity, the only honest way to properly describe the state of current affairs, is that the insanity will always insist it alone is perfectly sane and anything that tries to refute its supremacy is declared crazy and immediately purged. So it is not at all surprising that the dominate culture, the product of centuries of Delirium tremens, would beat its slaves to death and treat its enemies even worse rather than tolerate questions, let alone dissention. But there is real madness to the abusive methods the (religious) Empire employs, because what is really driven from us is our own innate and natural connection to The Long Conversation.

It really wasn’t my question that raised the hackles of old Sister Elizabeth, but rather the unspoken inquisition that sprang from the mouth of babes. Why was the Holy Spirit advocating death and destruction to those who did not embrace the one and only ‘God’, while the Native American Indians loved and honored Heaven and Earth and all its glorious creations? Why was the culture of insanity taking its marching orders from a holy homicidal maniac, while the filthy dirt-worshiping natives lived in relative peace and harmony and always tried to give back at least as much as they took?

These are ugly ego striping questions that could quickly destabilize an imperial empire and its enabling religion if they were ever allowed to fester, thus the reason for the liberal use of the ruler or rifle along with the threat of hell on Earth and eternal damnation.

See, it works like this. If we are to believe that we are not worthy, then we will allow ourselves to be judged not worthy, followed quickly by the willing surrender of our inner power to an external ‘authority’ who has been deemed supremely worthy by imperial or religious edict. But if we are to believe we are connected to everything and thus we as worthy as the mighty Oak or the industrious dung beetle, and certainly more worthy than any false external ‘authority’, there is no reason to surrender and thus we are uncontrollable. This is blasphemy pure and simple!

The Mighty Oak

By the time I reached walking away age and began my own search for meaning and connection, all that was left in my neck of the woods was cookie cutter religious doctrine and a brain washed state of artificially numbed elation. And this was well before the full impact of the drug called televised instant gratification had subdued and suborned a great nation.

Or at least that was what I had been told we were; a nation proud of its genocidal westward expansion that had now gone global. Convert those Godless heathens to the temple of self absorbed consumer consumption ecstasy or wipe them from the face of God’s little green Earth, ironically the very same little green Earth so loved by those Godless heathens.

For the dozens of now vanquished indigenous cultures, whose love and respect for all things nurturing and sustaining was a way of life, even this love of life wasn’t what terrified the war mongering nation(s). No, what really threatened the insanity was the revered and cherished internal communication the natives had with their spiritual forefathers, as well as those who would follow in their footsteps.

What could, would and still will topple the insanity was their Long Conversation, their spiritual connection that solidly anchored them to their own sanity. This was what condemned the millions of natives to their own eradication. If you can’t corrupt them by driving their sanity out, then just kill them all and be done with it.

If we are sane, we simply cannot destroy what we deeply love and respect. Nor can we destroy or even demean what we wish to pass to our children, concepts that would most definitely destroy the insanity if they were ever widely embraced. The holy madness needed divine justification in order to take by force all that it surveyed, and so anyone or anything that refuted insanity’s marching orders was labeled a blasphemy and a heretic, then promptly cut down past its roots, shock and awe scorched Earth style.  

Nothing, and I mean nothing, can be allowed to get in the way of the endless territorial expansion and locust like consumption of the mindlessly mad machine. Nothing will be allowed to resist the modern global Ponzi, especially a social and spiritual consciousness that speaks from the past andfuture to warn the present of the dangers of hubris, ego and homicidal insanity. This was and still is why The Long Conversation must be silenced. God forbid we actually listen to the only sane voices left, those found within our very own spiritual head.

Social conditioning tells us to ignore our inner knowing and accept the false external authority.

Of all the various forms of mind control witchcraft practiced by the unholy church/state alliance, by far the most destructive is the hijacking and subversion of our own spoken language. Simply put, just as we are what we eat, so do we think as we speak. So rather than removing ideologically unhealthy words from the spoken language and leaving a gap that would be noticed, all that needs to be done is to subvert or convert the true meaning. And before we know it we have spiritually lost people extolling the virtues of the National Security Endless War and Ponzi State. 

Trapped in an ideological hell by our very own language the few remaining free thinking deeply connected souls are forced to use the very vocabulary that enslaves us to wake us from our deep slumber. In effect we must use the very words that control us to free us, a nearly impossible task given the high hurdles we must overcome. Short of creating a new language, then widely distributing it via a hostile press and MSM, the only effective solution is for the population to reconnect to The Long Conversation.

Our powerful and supreme inner knowing has been carefully hidden from us for centuries, millennium even, primarily by diluted and dulled milquetoast words such as gut feeling, instinct, sixth sense or even faith and belief. Let us call it what it is, an inner knowing that squarely places the responsibility back upon our shoulders to right our own floundering ship. But even this is too great for our inflated and flattered egos to bear, so we eagerly grasp for the deflecting lie that it is all someone else’s mess to repair.

Of all the horrors perpetrated upon us by the machine and its sycophant henchmen, maybe the most frightening one of them all is the very instrument of our salvation, of our freedom, the one tool we can always access and is totally out of bounds to the insanity. I am of course speaking about freedom of choice, our unquestioned and inalienable right to become sane again, to break free from the madness machine and reclaim our own spiritual, emotional and ultimately physical sovereignty.

The seductive embrace of our collective insanity promises us all a softer easier way, an alternative path where we are told we can have our cake and eat it too. This is a bald faced lie, even if the machine consistently produces more cake as if by magic. It is a lie because that cake is not free, but instead derived from the sweat and tears of a less fortunate fellow slave caught up in the crushing gears of the grinding machine. Our Long Conversation with our inner knowing tells us this is a lie, that the lies of the insanity are self evident and thus brightly colored to enable us to abandon ourselves to the pleasure of the distraction. Let someone else pick up the tab. But soon enough it will be you and me who pays the freight.

If you understand what I am talking about with regard to The Long Conversation, about the whispering voices anchoring us to our own sanity, then we might even say that these spirits will do more than just whisper. If nothing else it is a comforting thought, that a power greater than us, thatour power has our back. It is precisely this thought that helps keep us sane. When we are connected to others, when we acknowledge that our actions affect more than just us, then and only then are we more likely to act sanely as we all share responsibility for the group as well as the individual.

09-29-2011

Cognitive Dissonance

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China’s Rare Earths Monopoly - Peril or Opportunity? John C.K. Daly of OilPrice.com

By John C.K. Daly of OilPrice.com

China’s Rare Earths Monopoly - Peril or Opportunity?

The prosperity of China’s “authoritarian capitalism” is increasingly rewriting the ground-rules worldwide on the capitalist principles that have dominated the West’s economy for nearly two centuries.

Nowhere is this shadow war more between the two systems more pronounced than in the global arena of production of rare earths elements (RREs), where China currently holds a de facto monopoly, raising concerns from Washington through London to Tokyo about what China might do with its hand across the throat of high-end western technology.

In the capitalist West, as so convincingly dissected by Karl Marx, such a commanding position is a supreme and unique opportunity to squeeze the markets to maximize profits.

Except China apparently has a different agenda, poking yet another hole in Marx’s ironclad dictums about capitalism and monopolies, further refined by Lenin’s screeds after his Bolsheviks inadvertently acceded to power in 1917 in the debacle of Russia’s disastrous involvement in World War One. Far from squeezing its degenerate capitalist customers for maximum profit (and it’s relevant here to call Lenin’s dictum that if you want to hang a capitalist, he’ll sell you the rope to do it), Beijing has apparently adopted a “soft landing” approach on rare earths production, gradually constricting supplies whilst inveigling Western (and particularly Japanese) high tech companies to relocate production lines to China to ensure continued access to the essential commodities.

REEs are found in everyday products, from laptops to iPods to flat screen televisions and hybrid cars, which use more than 20 pounds of REEs per car.  Other RRE uses include phosphors in television displays, PDAs, lasers, green engine technology, fiber optics, magnets, catalytic converters, fluorescent lamps, rechargeable batteries, magnetic refrigeration, wind turbines, and, of most interest to the Pentagon, strategic military weaponry, including cruise missiles.

Technology transfer is the essential overlooked component in China’s economic rise, and Beijing played Western greed on the subject like a Stradivarius, promising future access to China’s massive market in return, an opium dream that rarely occurred for most companies. You want unimpeded access to Chinese RREs? Fine – relocate a portion on your production lines here, or…

Which brings us back to today’s topic.

Rare earths and investment – where to go?

China is riding a profitable wave, which depending on what figures you read, produces 95-97 percent of current global supply, and unprocessed raw earth earths ores are currently going for more than $100,000 a ton, or $50 a pound, which some of the exotica fetching far more (niobium prices has increase an astounding 1,000 percent over the last year). Rare earth elements like dysprosium, terbium and europium come mainly from southern China.

According to a United States Energy Department report, dysprosium, crucial for clean energy products rose to $132 a pound in 2010 from $6.50 a pound in 2003.

The soaring prices however have also invigorated many countries and producers to begin looking in their own back yards, for both new deposits and former mining sites that were shuttered when production cost made them uneconomic before prices went through the ceiling.

However, a number of unknown factors play into developing alternative sources to current Chinese RRE production. These include first prospecting possible sites, secondly, their purity and third, initial production costs, where modest Chinese labor costs are a clear factor.

The 17 RRE elements on the Periodic Table are actually not rare, with the two least abundant of the group 200 times more abundant than gold. They are, however, hard to find in large enough concentrations to support costs of extraction, and are frequently found in conjunction with radioactive thorium, leading to significant waste problems.

At hearings last week before U.S. House of Representatives Committee on Foreign Affairs Subcommittee on Asia and the Pacific, Molycorp, Inc. President and Chief Executive Officer Mark A. Smith stated that his company was positioned to fulfill American rare earth needs, currently estimated at 15,000-18,000 tons per year, by the end of 2012 if it can ramp up production at its Mountain Pass, California facility.

Which brings us back to foreign producers. A year ago Molycorp announced that it was reopening its former RRE mine in Mountain Pass, Calif., which years ago used to be the world’s main mine for rare earth elements, filing with the SEC for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine. Low prices caused by Chinese competition caused the Mountain Pass mine to be shuttered in 2002.

Mountain Pass was discovered in 1949 by uranium prospectors who noticed radioactivity and its output dominated rare earth element production through the 1980s; Mountain Pass Europium made the world’s first color televisions possible.

Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications and intends to resume production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.

In one of those historic economic ironies, China was able to increase its RRE production in the 1980s by initially hiring American advisers who formerly worked at Mountain Pass.
The record-high RRE prices are also underwriting exploration activities worldwide by more than six dozen other companies in the United States, Canada, South Africa, Malaysia and Central Asia to open new RRE mines, but with each start-up typically raising $10 million to $30 million, not all will succeed. That said, the future is bright, as almost two-thirds of the world’s supply of REEs exists outside of China and accordingly, China’s current monopoly of REE production will not last.

So where do investors look to cash in on the RRE boom?

First, do your homework.

Exhibit A is Moylcorp, which would seem to be in unassailable position as regards U.S. production, but which nevertheless on 20 September after JPMorgan Chase & Co. lowered its rating of the company, citing declines in rare-earth prices, causing its stock to plummet 22 percent in New York Stock Exchange composite trading, despite being the best-performing U.S. IPO in 2010 after beginning trading in July, more than tripling after rare-earth prices soared as China cut export quotas.

Is there money to be made in RREs?

Undoubtedly – but the homework for the canny investor needs to extend beyond spreadsheets to geopolitics, mining lore, chemistry and Wall Street puffery. That said, it seems likely that whatever U.S.-based company can cover the Pentagon’s RRE requirements is likely to see more than a minor boost in its bottom line.

Gentlemen, place your bets – but do your homework first.

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Physical Silver Shortages Growing, Premiums Rising

located  at: http://sgtreport.com/2011/09/physical-silver-shortages-growing-premiums-rising/

by Patrick A. Heller, CoinUpdate.com:

In my Numismaster column earlier this week, I discussed some facts about what led to the sudden sharp drop in gold and silver prices, then speculated on some possible events that might be occurring behind the scenes. I concluded that the drop in prices represented a bargain buying opportunity instead of being an indication that the gold and silver markets were past their peak.

The last sentence of the column noted that delivery times on physical silver were backing up. In the two days since, there has been a significant slowdown in deliveries. Further, premiums are on the rise. The reason for these trends is that virtually everyone is a buyer of physical silver and not a seller at this week’s lower prices. Not only are people buying, but they are buying right away rather than taking time to “think about it.”

Read More @ CoinUpdate.com

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Gerald Celente - RT America - 28 September 2011

marketcall

http://watch.bnn.ca/market-call/september-2011/market-call-september-28-2011/#clip540386

Main Stream Media Exposes Police Brutality in Occupy Wall Street Protests

Main Stream Media Exposes Police Brutality in Occupy Wall Street Protests

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