Silver Stock Report Commentary
Silver Stock Report
by Jason Hommel, July 19, 2004
There were little changes needed in my weekly report on silver stocks, so I did not go through and re-produce the prices on the list this week. The last update can be found here: silverstockreport.com/ssr/SS42.html
Also, there is substantially reduced investor interest. Also, last week, I produced a list of the symbols so everyone can track the prices at Yahoo! Finance. Besides, if everyone else is taking some time off, perhaps I should as well. And I did enjoy some fun in the sun yesterday. But I could not stop myself from writing up a commentary bit by bit throughout the week.
Topics in this week's commentary
(so many titles to choose from)
The Wisdom of Children...
Ruling the world...
what are you Working for?
Silver moved up to $6.75 out of it's previous trading range of between $5.50 and $6.50 since the fall in price from $8.40/oz., and few investors are paying any attention. But this is how it must be. Bottoms are created when there is no investor interest. Tops are created when investors are scrambling over themselves to buy.
I believe we have just put in a bottom in the silver price because investor interest remains low.
I know investor interest is low for the following reasons.
1. Signups and emails are down.
2. Bullion dealers report that they are servicing 1/10th the buyers that they had when the silver price was between $7-8/oz.
3. Volume on the silver stocks remains very low.
4. It is very difficult to get orders filled when trying to place a bid for silver stocks.
5. Spreads are widening in the tiny silver stocks, again, due to low volume, and little investor interest.
6. Other gold and silver newsletter writers report that signups are down. This is described at lemetropolecafe.com as the "café sentiment indicator".
7. This is the summer. During summer, many investors (regardless of the sector) who are wealthy, leave for a summer vacation, and completely ignore the markets.
Dealers have reported to me that they don't understand how people can be so dumb as to buy at the top, and sell at the bottom. What they fail to realize is that their customers, the people, help to create the market. When the people stop buying, prices drop. When people start buying, prices rise. The masses can never buy at the bottom, and the masses can never sell at the top. That's just the way that markets work.
Now, given that people are not interested in silver now, and given that silver is not being used as money, we must be at a brand new, all time low. And that, to me, is extremely exciting, because we now have a new low price, that is over 50% higher than the price in the Spring of 2003, when the price was $4.15.
Unfortunately, here's what dealers also don't understand about silver. They see the action of the interest of their customers, and they may decide to short silver when people are going crazy to buy it. They may use the action of the people, and then take contrary action. Unfortunately, dealers may forget two very important things.
First, the dealer network has been devastated by the 23-year bear-market in silver. There are fewer dealers today. Therefore, with a tiny increased interest by the public, say, moving from 1 in 10,000 people being interested in silver, to 1 in 1000 people interested in silver, this looks like "the public is going crazy" since it represents an increase of customers of ten fold. However, still, the public has not yet awoken to silver. The media still was not reporting anything at all about silver when it hit $8.40! Thus, we are still at rock bottom.
Second, the dealers may forget that it is monetary demand that will ultimately drive the price. Monetary demand depends on the supply of money, not the supply of silver. Thus, given how many dollars there are, the price for silver could hit $2000/oz., yes, two thousand dollars per ounce! Therefore dealers should never short silver. It is just too dangerous.
I bought a book on Sunday, July 11, to read to my fiance's children, aged 10-13. (Yes, I'm happy to announce I'm getting married September 18th.)
The book was "Chicken Soup for the Preteen Soul." I've read many of these Chicken Soup books a few years ago, and I thought the stories were generally educational, interesting, and motivating. This edition, the "Preteen Soul," starts out with a poem written by Sara Alfano, age 11. Her poem:
If it were all up to me
The poor would have riches
And the blind man would see
The hungry would eat
And the weak would be strong
And the people with hatred would all get along
The ones who are greedy would start to share
And unfriendly people would start to care
The thirsty would drink
And the deaf person hear
And sorrow and sadness would all disappear
And that is how the world would be If it were all up to me.
I read this poem to the children, and I said I disagreed with Sara in line two. (The Bible says the poor will always be with us. Mark 14:7 "For ye have the poor with you always, and when so ever ye will ye may do them good: but me ye have not always.") So, to teach them without having to resort to a line from the Bible to settle the matter, and to encourage them to think, I said, "Imagine if everyone in the world had a million dollars or even a million ounces of gold. What would happen?" I had not spoken to them about silver and economics for weeks, yet, instantly, the children knew the answer. "Everything you could buy with your money would quickly disappear," the middle child said. "Almost no one would work," the oldest said. They even realized that the economy would completely collapse. They said, "Everyone would starve because nobody would bother to make food." "Except some people, the really smart people, they would continue to work." The youngest said, triumphantly, "What would be the point, the money would be worthless, and prices would rise extremely fast and go really high!" Such wise children... so capable of imagining the possibilities and consequences of folly...
If only our politicians were as wise as a properly questioned ten-year-old.
Do you know that those conditions are beginning to happen today? Commodities are not being produced fast enough, as supplies are shrinking, and prices for those commodities are skyrocketing. Things you can buy are disappearing. This is the end result of the U.S. society and government wishfully thinking, somewhat like Sara, that they can produce wealth for all, by merely printing trillions of dollars, and giving handouts to the poor.
You want the poor to have riches? Then teach them to not vote for government theft! And do them good by giving them an education in the Bible. This, the government is incapable of doing, even forbidden from doing, since they cannot endorse a religion.
There is a saying that goes like this: "If wishes were horses, beggars would ride." Well, the street beggars don't ride, but the politicians certainly do. They ride in luxury limos, at taxpayers' expense!
Paper money is not real wealth; it is theft.
Here is my poem: (Now I'm not a poet, so forgive me if it rambles on too long, or has no rhyme or form.)
If it were all up to me
The stupid would understand the unchangeable economic laws of God,
That you reap what you sow.
Atheists would cower before God,
Fools would be shamed into silence,
Wise men would teach and rule
Justice would not be perverted.
You would have to work to eat,
Charity and love and discipline would rule
Idiots would receive an education for free,
By learning firsthand the rules of God,
They would be put to work the economic way,
By staying out of their way, and not regulating their lives.
Charity would be voluntary,
Handouts would come from the Church, not Government.
People would not be given something for nothing,
But would receive value for value, in fair trade.
Usury would not have government support,
As any kind of slavery would be illegal.
And so, people would enjoy the fruits of their labors
and keep what they earn.
But the lazy would still grow poor,
And those who refuse knowledge and work would remain unhappy,
People would suffer the consequences of their own evil decisions,
Those who covet would always be in pain,
Those who commit fraud and theft would be killed,
Those with hate in their hearts would die.
And thus, we'd all be better off,
As communism and socialism could not flourish,
Nor could oppressive government.
And so, fewer people would be deceived.
Peace would be expected,
And war would be rare.
As economic prosperity would bloom,
With just weights and measures for all.
And that's how it would be
if it were all up to me.
But unfortunately, it's not up to me, and they didn't ask me. Nevertheless, I work to educate both myself and others, as if one day, they might ask, or perhaps a king might ask. Or maybe even the President or Congress. Daniel gave counsel to a King in Babylon, and so did Joseph in Egypt.
What are you working for?
This phrase has several meanings. First, why work at all? Second, what are you trying to accomplish, or what are you working to acquire?
I realize that to advocate investing in gold and silver bullion--that this is a difficult proposition to sell to people, in any era. I'm basically saying, "Hold on to your money (silver and gold being the only real money), make NO INVESTMENTS, and you will be better off." Investing in gold and silver is literally like investing in nothing--not that gold is nothing, and not that buying gold is not a wise investment. The point I'm trying to make is that buying gold and silver is not an investment in people, or their business plans, it is a condemnation of people. To say to buy gold and silver is to say that an inert thing will be more productive than any person can be. And that's a very harsh condemnation of all of society, nay, the whole world!
An advocate of gold and silver must understand that to buy gold and silver, is to reject all other investments in the entire world. Think of the implications! It condemns nearly all business enterprises in the entire world. (Except those who are working from paycheck to paycheck, just to live, since they have no money to invest anyway.)
Potential investors are people who have money to spend, but half the people today work from paycheck to paycheck, always broke or in debt, are simply not even capable of investing in gold or silver.
Next, there are people who may have some net worth, but they are also in debt, and this includes most Americans. It is extremely difficult to sell to this group, because, for them, owning gold and silver comes at a cost, the cost of their interest rate payments! If you have a credit card or a home loan, at 6%, most of these people would want to take extra money and pay off debt before taking a bunch of extra cash out of the bank, and letting it sit "idle" in the form of gold and silver. But perhaps this is ok. Perhaps those in debt don't deserve wealth to begin with.
Next, there are people with a substantial income, and/or people who live very frugally, who may have money left over to really invest. Now, 90% of these people have between $2000 and $10,000 to invest, which is not very much, perhaps expenses for one month. The key problem with convincing people who are earning money, is that I'm saying that the way to wealth is to take your money, and let it "do nothing". But they are in the process of actually making money, and doing it well, because they have more than they need, as is evidenced by their ability to save. So, to them, if they are self-employed, it would generally make the most sense to re-invest into their own business, or invest in their own selves and their own education, or invest with their employer if they are employed by a public company.
Finally, there are the really rich, people who are generally quite old, who have a substantial nest egg. Either they inherited it, or they have been wisely investing their money over a long time period. If their wealth survived the last 23 years of time, they generally have been able to preserve and increase their wealth by keeping it in bonds, stocks, or real estate, and most certainly not in silver or gold. To convince this group of people to invest in a "thing" like gold and silver, you have to do two very difficult things.
First, you have to convince them that the way they maintained or created their wealth in the past is not going to be the way to maintain or create wealth in the future, so you have to convince them to change. It is axiomatic, (a given recognized truth) that old people (who have the most wealth) resist change the most of all age groups, so it is very difficult to sell them on gold and silver at the present time.
Second, as for any investment, you have to convince people that this investment is the best one, better than the alternatives. But to invest in a thing, means that things are better investments than people, and that's a rather harsh indictment and condemnation on society. Literally, when I say investing in gold and silver is the thing to do these days, I'm saying that there is nobody on the planet, no person, no business plan worth supporting. (With the possible exception of silver mining companies.) Again, this is a very harsh condemnation!
When will people listen? Perhaps when the farmers decide to buy silver, instead of seed for the next harvest!
AND THEY MAY WELL DO THAT IF SILVER CONTINUES TO PRODUCE A 50% RETURN EACH YEAR!
When will people listen? Perhaps when the farmers decide to sell their produce for gold and silver only, and reject all paper money! Perhaps when people grow hungry and thin, and they realize that wealth is not created when paper is printed, but wealth is only stolen.
What am I working for?
First, I'm working to help people understand. I'm teaching people about the laws of God, and about economic reality. I view my work as a ministry. I'm ministering to the needs of people who have been deceived by the fraud of the paper dollar. My work has turned into an extremely profitable business. I have invested some money back into my own business.
Second, I also buy silver (I work to acquire silver, not fraudulent dollars), because I know that even my own business may not always be the best thing to invest in! I do purchase advertising from time to time. But many ads were not worth it. And I'm less likely to buy advertising now, at the bottom, when people just don't care about silver. I spent over $1000 to advertise at CNN.com even when things were exciting, and I got zero results. It would have been better if I had kept the silver. But other ads helped to double and quadruple my email list.
Remember above where I said that investing in gold and silver condemns "nearly all" business enterprises? Well, except mine, of course. And except those who are working to save people from the economic destruction that paper money will bring.
Know how I got my start? I started this essay talking about Children. Why do I bring that up? Well, my dad has money, and I'm his child. I knew if my father's money was invested well, that maybe I would have an inheritance. It was not wrong to work for that, but right! The Bible says a man should leave an inheritance to his children's children!
Proverbs 13:22 "A good man leaveth an inheritance to his children's children: and the wealth of the sinner is laid up for the just."
I had to humble myself greatly to be able to "tend the family flocks", as Abraham's children did, and to follow the Proverb.
Proverbs 27:23 "Be thou diligent to know the state of thy flocks, and look well to thy herds."
I had to put myself under my father's authority again, at the age of 30. I'd provide him with information, but realize it was his decision. Yet it was a sale I could not afford to lose. Yet, I'd have to respect his repeated requests to "not talk about silver anymore, not for the next week or month!" And that was so difficult to do. How many men at age 30 could humble themselves to live with their father for the express purpose of convincing their father to invest wisely, like I did?
And now I'll be ok, unless my father goes on a wild spending spree. Just as my father had to trust me, I have to trust him. All my advice and work would be almost nothing for me if my father decides to leave me nothing, which he still could decide to do, and it's within his right.
I began by convincing him to buy gold and silver, and the highly leveraged stocks. I spent about 2-4 years to fully convince him. I believe the time was well worth it. So far, convincing my dad has been very successful for me. Literally, there is no job in the world that could have paid better, given my age and qualifications, and given the returns he has gotten on his investments.
Furthermore, my father's stubbornness, and final acceptance, helps me to realize that other people will also become convinced, over time. My father's skepticism, sales resistance, and refusals also have taught me to really think hard about why to invest in gold and silver. It's one reason why I know so much, and it's partly why I'm a fairly good silver advocate today. Sometimes, working to condemn the frauds taking place in the world, is the most productive thing you can do with your time and energy.
And so, I ask you again, What are you working for?
People say that "gold is inert". People say that "gold does nothing". People say that "gold does not pay interest". They are all wrong. Gold keeps men honest, and prevents theft by way of government created inflation. Those are very important and productive things. An economy cannot survive without honest exchange, which allows for trade, the division of labor, and extraordinary productivity.
Are we really so productive that we should allow our wealth to be stolen? Such a large percentage of society works for the government, and so many mooch off of that government, and receive no Godly education in the process. Isn't it time to slap them in the face with economic reality and the laws of God by buying gold and silver? As I wrote last week, there is something you can do if you want political change, and it's not voting at the polls. The most important vote of all is to buy silver.
Gold also teaches many of God's economic truths, and perhaps that's the most important thing of all. Gold and silver keep men honest, and that is always needed in a world where all men are found to be liars, which is another of God's truths. Romans 3:4 "God forbid: yea, let God be true, but every man a liar; as it is written, That thou mightiest be justified in thy sayings, and mightest overcome when thou art judged."
Gold and Silver reflect the divine. And they also reflect the wisdom of children.
Now, let me share with you some of the most shocking information I've run across this week. U.S. banks are in default, one to another, in amounts that change, over time, from $900 billion to $1.4 trillion dollars. This is a lot of money, even given that M3 stands at over $9 trillion! 1.4/9 = 16%!
Here is the source of this spectacular bit of information: www.lewrockwell.com/north/north282.html -- June 30th, North www.jsmineset.com/miscfiles/PollockM3.pdf -- June 9th, Pollock
Given that there is no longer any honor among the banking thieves, it should be no wonder that the Rothschilds have left the gold fix, and that AIG has left the silver fix.
The reason why these inter-bank transaction failures, or bank defaults, are occurring, is the rise of interest rates. Pollock writes, "The problem is that the market will raise rates if the FED fails to do so."
Thus, if people sell bonds, in the slightest, to start buying silver or gold, and if they sell enough bonds to cause bond values to lower and interest rates to rise, it will cause these bank defaults to increase, and cause the collapse of the banking system. And then, how much more will people flock to gold and silver, which cannot default? What do you think the dollar be worth after a systemic banking collapse? It is always much, much less, especially in terms of gold and silver.
But who in their right mind would want to own bonds paying 1% per year, when silver has shown price performance of 100% gains from $4.15 last spring to $8.40 this spring, and has held on to gains of over 50% at the current price of over $6.50?
Let them owe their trillions to one another. I don't care. I own silver, and I don't keep money in the banks. And I'll swap some for gold at the right price. In the end, "He who has the gold makes the rules," and, really, should it be any other way? And how will the world be, when it is all up to me and thee?
Really, we shouldn't have to worry about "them" confiscating "our" silver. They should be worried about us confiscating their land and their government, as we will be buying both with our gold and silver.
Due to reduced investor interest, I may be able to read and answer some emails this week. So, if I'm asking you the right questions, let me know at firstname.lastname@example.org
Also, my web site has been updated. Please take a look at silverstockreport.com
I will be speaking in Idaho at the Silver Summit in September 23-24 www.silverminers.org/summit/index.html
I will be speaking in Toronto at the Cambridge Gold Show on October 3-4. www.goldshow.ca