SGM Metals: Sprott $1.5 BILLION Silver Buy Could Bring $100 P/Oz!

Jan. 20, 2012 - PRLog -- tfmetalsreport.com reports: [ Most people here know what Eric Sprott did to the silver market 14 months ago. It was moping along at 18,  and from deep left field he did the Sprott Physical Silver Fund (580 million most of which he bought himself) and blew the Silver price to $50 in 5 months, almost taking JP Morgan to Chapter 11 in the process. They have been trying to raid it down ever since, including today, given that they were probably totally bankrupted by the move.

      It took 3 months for COMEX to deliver that much physical, many bars POSTDATED the issue, some still warm from the refinery, meaning, in short, there is no sizeable physical silver ANYWHERE and it certainly hasn’t improved a year later. In effect Sprott did a perfectly above board Hunt brothers corner on these COMEX thieves, and hoist them on their own petard, talk about clever. Thank you Mr. McGuire, I hope you have recovered from your injuries in the hit and run you had the day after the hearing.

IMHO, one incontrovertible fact thus holds, there is no material size Physical Silver anywhere, COMEX, LBMA, pick  it, so silver is wildly vulnerable to a second similar sized issue. We would see 50  far in the rear view mirror. The JP Morgan raids, the coordinated margin call raises,  the Sunday night massacres, all these are testimony to this fact. Silver is in substantial shortage and preposterously mispriced as JPM  desperately tries to wriggle out from under their nightmare short position.

   Well the short answer is he COULDN"T he had a 365 day waiting period, Obligatory, which ended two weeks ago. Please consider that the 580 million PSLV Issue tripled the silver price, 18 to 50, so....rinse and repeat, do we go to 100 if he does another? For starters YES!

  The Toronto Globe and Mail announced this morning that Sprott has just  filed a shelf offering for, brace yourselves, a billion five, follow up,   Physical Silver, same as PSLV so here we go. Blythe Masters has in negotiated a volume discount with the local Depends distributor. This could get serious.]

Well there you have it, Eric Sprott’s major silver purchase order for PSLV from Christmas of 2010 drove silver prices from $18 p/oz all the way up to $50 p/oz! Now we find out that there was a 12 month mandatory cooling period imposed by the bank connected regulators who wanted to ensure that silver wasn’t driven into the stratosphere as the truth about the true silver shortage worldwide would have surely surfaced if the buying was permitted to continue. Also added to the cooling period of 12 months was almost a gag order as well. This could only be attributed to the fact that the banks and market masters are terrified about the true dynamic of the availability of physical silver coming to the surface at such a critical time where the Federal Reserve so desperately needs faith to remain in the US dollars viability. If the truth was to have surfaced already about the true worthlessness of the fiat money system the entire world would have rushed into gold & silver as the true reserve currency. If this scenario was to play out, everything in the world you know about monetary policy would be up ended and the profits in banking, finance, Wall Street, real estate, would have to be re-invented to facilitate a sound money currency.

The threat of the fiat money system coming face to face with the correction of free market principles is inevitable, but know that it can be postponed and manipulated by relentless money printing to give the perception of stability for a time. But that time is only manageable for a while until the free market forces apply pressure from all sides, then it’s only a matter of human emotion remaining stable to stave off the rejection of the currency in question by the other central banks of the world. Once that tidal wave of human emotion begins to shift it can, and often does, quickly morph into a panicked exodus into the only asset that can protect purchasing power and wealth from the destruction of the currency, gold & silver.

Take comfort in knowing that this won’t happen over night. It usually starts with a few key trading partners wisely realizing that they stand to be severely hurt if the currency fails so they begin to insulate themselves from that possibility by restricting the exposure they have to that currency. Let’s say for example China, who is a massive consumer of oil, inks a deal with let’s say Russia, who has managed to tap into the worlds largest oil supply, and they draft the world greatest energy deal in history but specifically state in the trade agreement that they shall NEVER transact in US dollars, this is how it begins. Now you have what some would argue as being the third and fifth largest economies of the world who now have negotiated to remove the US dollar from their global commerce. In effect this has partially removed the US dollar from it’s world reserve currency status. Now that the door is open others may pass through it. Now we see roughly 1 year later that in a bid to secure a much needed line of commerce with the behemoth China, Japan has agreed to follow China’s lead in removing the US dollar from their global commerce as well. Rumblings of India and several middle eastern nations following suit are getting louder and louder, so the genie is out of the bottle and it is not going back in anytime soon.

The current dynamic is one where the United States largest creditor, China, is no longer willing to fund our deficits by purchasing our Treasury Bills and the FED is ‘forced’ to monetize that debt with fancy named programs like ‘Quantitative Easing I & II’. This quickly becomes a vicious circle as the more the USD is rejected worldwide the more the FED is forced to monetize. The more the FED monetizes our debt the more rejection of the dollar by our trading partners we see. So as the volume of newly printed dollars rapidly increases as a result of the monetization of the debt at home combined with less and less trading partners willing to hold the ‘US dollar hot potato’, the end result will be that ALL of these tens of trillions of newly printed dollars will be dumped back onto the United States which will bring unspeakable consequences to the citizens at home.

As the US is buried in surplus dollars rejected from abroad those dollars will ultimately drive inflation by raising the prices of consumer goods and wreak havoc on the struggling economy at home. Consumers will be forced to pay more and more for food, clothing, housing and gasoline which all but guarantees that there will be little or no ‘disposable income’ or extra money to fund a vacation of even a trip to the movies with the family. This reduction in discretionary spending will translate to lower profits for the corporations, which equals poor performance in the stock market, which translates into increasing losses in 401Ks & IRAs. As this cycle gains momentum we will see the companies who have suffered a reduction in profits will match that by reducing their overhead by reducing their work force in an effort to balance the numbers. This new wave of cost cutting layoffs will drive the unemployment numbers higher, which results in more foreclosures and people without insurance benefits. These people will be looking to the government for aid that will come in the form of unemployment benefits that will only add to the mound of debt that has driven the US into this scenario to begin with. There is much more to cover but the point should have registered by this point, we are on an unsustainable path and the consequences will be profound. Get out of harms way now and establish your ‘Economic Insurance Policy’ in gold & silver now and begin to participate in the sound money debate with alternative currencies.

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SGM Metals strives to offer not only wealth preservation precious metals investments to offset weakness in the economy, but to help educate our family of clients to better identify the threats to their financial security.