Silver Market Technical Analysis
by Eidetic Research
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As previously discussed, we started our first model portfolio on July 1, 2009. The purpose of this simulated $100,000 portfolio was to 1) illustrate our current investment allocation stance...
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The images below give a complete history of The Metal Augmentor’s track record of trades discussed to date. You’ll need to click on...
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International Tower Hill Mines (AMEX: THM; TSX: ITH) recently completed the spin-out transaction of Corvus Gold (TSX: KOR) announced back in May 2010. Shareholders received 0.5 shares...
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We previously criticized the highly dilutive desperation financing carried out by Breakwater Resources (TSX: BWR) back in April 2009 at a split-adjusted price of C$1.00 per...
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As we recently wrote in our Company Index regarding Endeavour Financial (TSX: EDV):
Login or Subscribe to Read More...Having watched several mining companies with large cash positions sit dormant for...
In June we posted a list of 5 companies that were under review for potential addition to Metal Augmentor portfolios and we’d like to update...
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Dr. Ron Paul, U.S. Representative from Texas, wants to have an audit of the gold held at Ft. Knox that is under the supposed control of the Federal Reserve. He even plans to introduce legislation next year to force the Fed to conduct an audit:
“If there was no question about the gold being there, you think they would be anxious to prove gold is there,” he said of the Federal Reserve.
This is not the first time the congressman has made his pitch. “In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves – we had 17 members of the commission and 15 voted no to the audit,” said Paul. “I think there was only one decent audit done 50 years ago,” he said.
Paging Dr. Paul! Paging Dr. Paul! The U.S. gold reserves held at Ft. Knox and elsewhere are actually under the control of the U.S. Mint, a bureau of the U.S. Treasury Department, and these gold reserves are ALREADY being audited by the independent accounting firm KPMG. In fact, an annual audit has been ongoing for a number of years, first by inspectors of the U.S. Treasury Department since the 1980s (Treasury inspectors are sworn federal law enforcement personnel) with additional audits by independent accounting firms starting in the 1990s.
When KPMG was appointed independent auditors for the 2005 fiscal year, the accounting firm insisted on a revised audit format that involved a complete audit including accompanying Treasury inspectors on the physical count of bullion in vault facilities at the Ft. Knox and West Point bullion depositories. Prior to this and despite Dr. Paul’s claim that the last audit was conducted in the 1950s, Treasury inspectors had conducted rotating audits of bullion held at the Ft. Knox, West Point and other depositories since the 1980s as part of a comprehensive overhaul of governmental accountability by the Office of the Management and Budget. These audits include test weighing and assays that have periodically revealed minor discrepancies in bullion fineness and weight over the years. Not all the bullion is counted each year, mind you, rather it is done on a rotating basis with Treasury seals being placed on each audited vault. The inspectors check at least on an annual basis that these seals have not been tampered with. According to my reckoning, all vaults should have been initially rotated through a few years ago, which means that the vaults now being inspected are already on their second or third audit pass.
Silver Market Technical Analysis
by Eidetic Research
The Overall Picture
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In a recent interview conducted by Jeff Clark of Casey Research and self-declared as The Best Gold Interview of 2010, Andy Schectman of Miles Franklin discusses the future supply situation in the retail bullion market. Unfortunately, most people who have been around the block in the gold market will not find his views to be particularly insightful or surprising so we’d like to spice things up a bit by adding our own contrarian arguments and twisted perspective.
Among Mr. Schectman’s not-very-extraordinary claims is that the apparent shortage of gold and silver bullion and the resulting premiums that arose during the financial crisis in 2008 were caused by extremely strong demand from panicked retail buyers. Mr. Schectman then warns us that we should expect more retail shortages in the future. We can’t really argue with his logic but we believe he is only telling half the story given that many dealers were in fact rationing their existing inventories as a result of low bullion prices. Simply put, the dealers were unwilling to sell the shelves bare at prices so terribly low.
While it is true that bullion dealers are running a business like everybody else, most of them are also gold (and/or silver) bugs and consequently have much of their wealth sunk into their business in the form of bullion inventory. That way when the eventual and inevitable price spike to $5,000 gold and $500 silver comes, they can sell it all and retire as billionaires. This might not be the case for the large corporation-style dealers or the tiny numismatic coin shop mom-and-pops but there are a lot of dealers between those two extremes. Their inventories are typically not hedged or only slightly so. More to the point, these dealers are expecting the big score along the way and would only sell out at a loss under desperate circumstances.
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