Silver Stock Report
by Jason Hommel, September 17th, 2008
In the midst of $100+ billion bankruptcies, it may seem a bit strange to read my reports of tiny multi-million dollar silver mints and dealers who are in trouble with delivery delays, such as the Perth Mint, Kitco, Johnson Matthey, NorthWest Territorial Mint. You might be wondering if I’ve lost my perspective, or focus.
But I’m concerned for the people who were smart enough to get “into silver” because they were wise enough to have tried to protect themselves from the bankruptcies of the big banks, but who forgot one thing. They didn’t get physical silver, instead, they have paper silver that might end up meaningless.
Those companies with “liabilities in silver” are not positioned well for a bull market in silver.
One way to detect when a company or person is lying is if they contradict themselves.
Kitco Contradictions and Poor terms:
Whether you are buying or selling to Kitco, there is a delay. Why is there a delay on both ends of the business?
Furthermore, Kitco says they are buying too much precious metals, yet, they admit they are not getting enough silver.
At their main page, Kitco says:
In order to reflect the current strong demand for Silver Maples and Silver Eagles, Kitco is temporarily increasing its current bid (buyback) price for these particular products. Please visit our Selling to Kitco page for more details.
As one of my readers translates:
“In other words: In order to acquire bullion we do not have that is already sold and paid for by our customers we will pay $1 per ounce more than previous posted prices!”
If you are selling metal to Kitco:
IMPORTANT: Due to the volatility of the market, we are experiencing a significant increase in the volume of products that are being sold to Kitco. Although Kitco and HSBC Bank are working hard to stay on top of this, you may experience a delay in your package being processed. We apologize for any inconvenience this may cause, and appreciate your patience and understanding.
If you are buying metal from Kitco:
Kitco is working diligently to fulfill all existing client orders. We apologize for any delays in order fulfillment which are a result of production and delivery delays imposed by certain mints and by our suppliers.
The following products have been temporarily removed from our Precious Metal Store until further notice due to production and delivery delays that retailers are currently facing; 1 oz Gold bars, 1 oz Kitco Gold bars, 10 oz Gold bars, 1 oz Silver Eagles, 1 oz Silver Maples, 100 oz Silver bars and 1 oz Palladium Maples.
These products will be relisted and available for order as soon as fresh inventory is readily available. In the interim, we will focus on completing pending orders as our top priority.
Please note that all remaining products listed in our Precious Metal Store are available for immediate delivery including a very healthy inventory of 1000 oz Silver bars and Austrian 1 oz Silver Philharmonic coins.
I will tell you what I would do.
I would never buy from or sell to Kitco.
If I owned any metal in a pool with Kitco, I’d cash out immediately.
I have bought silver from Apmex.com and tulving.com, and other fine dealers.
I will give Kitco advice, too. Get a bank loan, quick, perhaps from the FED, and start paying everyone on time, otherwise people may begin to think you are bankrupt. Jon Nadler may have connections, he’s from the banking industry. Spend some money to fix your order department, and for goodness sake, spend a little money on a 100 oz. bar making machine to make plenty of nice, new “Kitco” brand 100 oz. bars for your pool account holders. You wouldn’t want word to spread that silver is in short supply, it might make investors decide to buy silver, which could cause you pain if you are short silver, and don’t have all the backing for your pool account.
And also, Kitco, you need to raise your buying premiums for physical silver much higher. Paying 87 cents over spot for Eagles and Maples won’t help you.
Silver Eagles are sold and rationed by the U.S. Mint at about $1.25 over spot. I don’t know how Kitco will get Eagles, except in the secondary market from customers. But people are not selling much physical now.
The U.S. mint sells to about 15 major wholesalers at a minimum order of 25,000 ounces, who sell them for more to other main wholesalers, which is why Tulving and APMEX are selling them at $4 to $4.29 over spot. It’s because of the rationing, and silver shortage.
Also, on Ebay, Eagles are selling at over $15 in tubes of 20, at $4.50 over spot or much more, up to $20/oz. So why would anyone sell Eagles to Kitco at 87 cents over spot?
APMEX is now paying $2.00 to $2.50 over spot for Eagles! And they are also selling up to 15,000 to 30,000 ounces in one day! At that pace, that’s 1/4 to 1/2 of the approximate pace of 20 million Eagles minted by the U.S. mint this year!
These rising bids are the strongest evidence of the shortage. They show a rising disconnect between physical metal and paper promises of metal.
It appears as if the bullish case for metals is hurting Kitco’s business and other businesses, such as Perth and Johnson Matthey. It appears as if they asked Jeff Christian to make a video today to “refute” the argument that silver is manipulated. But all of those companies are all manipulating silver prices, through delivery delays, which show the obvious manipulation of selling silver that they do not have, which is the essence of the charge of manipulation at the COMEX, too!
The Silver Conspiracy – by Jeffrey M. Christian , Sep 16 2008 5:27PM
GATA ridicules Jeff’s video and rightly so.
Jeff says the silver futures market has two basic “functions”; allowing miners to hedge, and to allow speculators to gamble. He claims the bankers/dealers (who have the largest positions) who are short are offsetting positions in other markets, such as miners who have hedged to them.
However, how could he know, since the CFTC keeps the names of these dealers and banks with the large short positions secret?
Besides, do you see how that makes no sense? Why would a miner hedge with a dealer in the over the counter market who then has to go short, when the miner could hedge at COMEX and go short directly? And why would a dealer suddenly short 130 million ounces of silver all at once, triggering the stops of many other long traders who would then be forced to sell, such as the Osprey fund, causing a crash? The miners have no incentive to do that to the price of their own product!
He next says that futures contracts can be settled for cash, which is true, and that they don’t have to deliver silver, which is right. Then they should not be affecting the price either then, should they? But they are!
He says the concentration is not unusual.
He says there is no evidence of unusually large positions.
But I documented, and did the math to show that 2 banks sold 30-40 times as much silver, on paper, as investors buy physical in a month!
A Tribute to 7th Grade Math August 31, 2008
Jeff ignores Ted Butler’s position and proof that the open interest in silver is larger as a percentage of world annual production, than in any other commodity.
Jeff says there is no logical profit motive for the conspiracy!
This statement boggles my mind. I don’t see how an obviously smart man like Jeff can be so stupid. I have to wonder if they paid him off, because I cannot believe he is that dumb. I give him more credit than that, he appears to be intelligent, and intelligently attempting to lie, on purpose, even if he appears a rather nervous and bad liar. So, I can only conclude he was bought off some how. And that leads me to wonder. I have to wonder if a black van or sedan will someday pull up to my house and men in black suits will jump out and offer me $10 to $20 million to shut my mouth about silver. See? That’s just one more reason to promote silver, you never know!
Getting back to motive! The motive behind the suppression of silver is obviously to support the dollar!
Spending $2 billion to short silver, as they did, to make the dollar look strong and ok, while they are spending $100 billion or more, daily, to bail out the large banks is a good trade for the Fed to make!
But they are failing, because the manipulation did not provide any silver to the marketplace, and people are discovering the silver shortage, and waking up to the opportunity in silver.
What is really ironic is that Jeff Christian’s company, CPM Group, provides all the statistics on silver that I’ve been sharing with you for years now. And for the last two years, at the Silver Summit, Jeff said he was bullish on silver. So why would he put out a hit piece on silver? Isn’t that just odd? On the other hand, Jeff does know who his clients are, and maybe that’s why he owns silver! Maybe it’s more profitable to make his money on that side of the street?
Oh yes, do you see who is hosting his video?
Anyway, don’t order your silver through Kitco, nor Perth, nor Johnson Matthey, nor AMARK, nor Northwest Territorial Mint, nor the Sunshine Mint. Other bad dealers are MONEX and Goldline.com, who offer “leveraged silver”. I also dislike any company that hypes numismatics.
A note about Tulving: They are so reputable, that when they sell out, they mention it at their website. But more than that, they remove any notice of price, replacing price info with question marks!! Even better! That’s honor. That’s truth! Without product, there is no price! It seems the companies who cannot find silver, because they are offering too little for silver, but who are happy to take your money to lock in a price for silver, have forgotten that basic axiom of business.
Paying the higher price to a company that actually has the silver, and will definitely deliver the silver, is worth it. Especially in a era of lies and bankruptcies.
By the way, tonight I made my own little video. I merely show the difference in volume between 500 ounces of silver Eagles, and 500 ounces of silver bars. It’s a distinction that I just can’t fully describe on paper. The silver Eagles take up about 4 times as much space.