Wednesday, April 27, 2011

Bernanke Speaks, Silver ETF Volume Exceeds that of S&P 500 Index ETF, is the Collapse of the Currency Regime at Hand?

4/27/2011 Portland, Oregon – Pop in your mints…
After a brief hiatus, we are back at The Mint and quite amazed at what is transpiring.  It is, of course, a logical and expected outcome of the present situation.  Simply, it is what the immutable laws of economics (namely supply and demand) demand.  What amazes us is the breathtaking speed with which things appear to be transpiring.
What are we talking about?  Witness for yourself, fellow taxpayer:
From the Wall Street Journal:
"The mania for silver has spread to the stock market as day traders pile into the buying.
Trading got so heated during the past two days that shares traded in the iShares Silver Trust, the biggest exchange-traded fund tracking the price of silver, topped that of the SPDR S&P 500 ETF, usually one of the most actively traded securities in the world.
Day traders "are going crazy," says Joseph Saluzzi, co-head of trading at brokerage firm Themis Trading. "It's typical of the bubbly speculation that's been going on in silver."
If you are interested in purchasing physical silver and not the "maybe it exists, maybe it doesn't" iShares/JP Morgan/ETF variety, our Affiliate APMEX can help you acquire Brand New Silver Bars and Rounds.  They are offering free shipping on mobile orders until the end of April: Mobile Website

Back to the news, we now see an article that in months past would have been blasphemy at CNBC:
When the Fed discontinues its government bond purchase program at the end of June, a large portion of current demand will disappear. The Fed purchased more than 60 percent of all traded US Treasuries in the fourth quarter 2010," said Alessandro Bee, a fixed income strategist at Sarasin in Zurich in a note to clients on Wednesday.
"Experience gathered over the last two and a half years shows that expectations were more important than supply and demand. Once the starting shot for QE1 and QE2 was fired, yields in each case rose, despite the added demand for bonds caused by the Fed's action," Bee said.
For those of you new to The Mint, our current case study is the US dollar.  We are looking for clues of its imminent demise, a demise which would have ramifications that simply boggle the mind. 
Over the past 30 years, up until 2007, the dollar had generally been very good to America.  It was the world's reserve currency and the Americans had first dibs on it. 
Then, like a beloved aging relative, the US Dollar suffered something of a stroke in August of 2007 from which it has not, nor will it ever, fully recover.
Upon witnessing the "stroke," the monetary authorities thought they had a simple supply shortage and began to correct this by working triple shifts and refining their production processes to the point that they can create US Dollars out of thin air and keep a stranglehold on short and long interest rates.
Perfect, right?  Problem solved, the dollar will be on its feet in no time and no one will know or care.  That is the line that the monetary authorities have been feeding us in some way, shape, or form for the past three years.
Ben Bernanke, giving the first official, government sanctioned post FED policy meeting press conference, gave a classic example of the line today in response to nearly every question and took the opportunity to prod Congress to reduce the deficit, which is necessary to keep the illusion of the government and financial system's solvency intact.
We prefer our Mint finger puppet version (which you can see here) of the press conference to the real one.
Then Timothy Geithner, the US Dollar's second greatest apologist after Bernanke, came out yesterday with the kiss of death, stating that the US will not pursue a strategy to weaken the dollar.
Over the past three years, many an investor has believed the line and consequently have been waiting for their beloved relative (the dollar) to return to her former vitality.  Others realized that it is time to begin to prepare for the beloved relative to make drastic lifestyle changes and perhaps to pass on from this world. 
Those who were preparing for the demise saw that the new production process that the FED is employing has a fatal side affect.  The process emitted enormous amounts of debt denominated in US Dollars, which completely overwhelmed what the alchemists at the FED were trying to accomplish.  Add that to competing mad scientists (read Central Bank Governors) the world over and the patient's quality of life was not only rapidly diminishing, her very lifespan was being shortened at a staggering rate.
All the while, the doctors (read bankers) made money both attending the patient and taking kickbacks from the pharmaceutical companies (The FED and US Treasury).

A Chinese Satire of the Bank Spin Doctors?
The end result of this rapidly accelerating plot line is that US Government debt and the Dollars created to pay them are quickly moving from their central role in the global financial system to becoming a byline in history books alongside the paper mark of the Weimar Republic.
So we stand today, fellow taxpayer, and witness that Silver, the people's money, is at least in theory trading in greater volumes than the entire S&P 500.  This has taken almost all observers, including your author, by surprise and taken at face value would mean that the price of silver is about to explode further to the upside.
Will it be much longer before the price of Silver outstrips the S&P 500?

Whatever is happening, it appears to be happening quickly, and one would sleep much better being short (selling) dollars and dollar denominated bonds and being long (buying) silver and, really, almost anything else tangible will do!
Stay Fresh!
P.S.  Please check out our latest 72 Hour Call at
Key Indicators for Thursday, April 27th, 2011

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.