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Late September Economic Rant -Roger Mason

Many of you bought silver stocks in the last year only to see the price drop dramatically.

The HUI (basket of unhedged gold and silver stocks)  fell from 480 to 280 already. Silver is very volatile, the current prices will turn around, and the HUI will go over 500.

We are out of physical silver for individuals and have been. There isn’t any for real people and investors. The industrial people get it all, and soon they will be out as well. There is a two tier price system for silver now….the official paper price, and the real world price about $4 higher. You can still get 1,000 oz bars (70 pounds) from a few dealers for about $12,000, but it seems only about 1% of investors want them. If you can afford 1,000 oz bars run, don’t walk, to your local coin dealer and get some. He gets them right off the COMEX. They will disappear soon. Silver bulls have been waiting years now for this event. The news couldn’t be better! We’re out of silver for the first time since silver was discovered. Almost every ounce of silver ever mined has been used up, gone, never to be seen again. Silver is first and foremost an industrial metal. You cannot have our current technology without silver. Only a little jewelry, religious artifacts, and bullion still exist out of the many millions of ounces that have been refined over the centuries. Always remember we are long term investors, and hold for the long term. Short term fluctuations just don’t matter. Keep looking at the Big Picture here. The Rothschilds used to say, “Buy when there is blood in the streets.” They are right. Paper silver is $11, but that isn’t the real world price at all. Every year we use up far more silver than we mine or reclaim, and we’re finally out of silver reserves. In 2000, for the first time in U.S. history, we deleted the Strategic Silver Stockpile. The U.S. Mint has been out for years now. The silver on the COMEX is basically nearly all owned and not available.

We have warned you against buying paper silver. The silver ETFs (electronic transfer Funds) have been wildly popular, but they only have a small fraction of the silver reserves they need to back up their sales. When silver goes up in price they are going to go bankrupt, and the investors will be left holding the bag. This is true of private mints such as the Perth Mint which has been selling unbacked silver certificates. They are about to go under as well, since they have almost no silver. Folks, the largest silver dealers in the world are out of silver, can’t get any, and won’t get any. This includes Kitco, Perth, Tulving, Scotia Mocatta, APMEX, Matthey, and all the rest. Perth alone could default on almost one billion dollars in unbacked certificates. The gold to silver ratio is an incredible 71 to 1, but headed back towards the classic 15 to 1 ratio. Silver has far, far more potential than gold. All the gold ever mined basically still exists, and almost none of it has been lost. It is money, and not needed in technology. Less than one billion dollars of investment silver is sold every year, but this is changing. The gold to DOW ratio is now about 15 to 1. It was an unbelievable 1 to 1 in 1982 and will return to that ratio of 1 to 1 ($5,000 gold and 5,000 DOW for example) in the next few years. 

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Casey Research published a chart that is so upsetting it is hard to comprehend. The U.S. now has an account deficit of almost one trillion dollars a year. No other country in history has ever done anything like this. We’re the first. And you thought The Much Greater Depression was not around the corner? It is. The eleventh bank just failed, and we will see hundreds of banks fail in the next two years. Will yours be one of them? No savings deposits, no CDs, no safety deposit boxes, and minimal checking accounts. As of Sunday August 7 the government nationalized and bailed out Fannie Mae and Freddie Mac AT YOUR EXPENSE. This will cost every person in American about $30,000 for the $1 trillion bill. This will make the housing collapse worse, not better, as the media is trying to tell you. It could get much worse than $1 trillion, too. You see here below that around 1980 it only took 100 ounces of gold to buy the average American house.  By 2002 it took over 800 ounces of gold to buy the same house. It takes 265 ounces today ($212,400 median price divided by $800) to buy that house. The average house price will fall to at least $150,000 and gold will rise to $3,000.

This will mean an incredible 50 ounces of gold to buy the average house within five years. This is unbelievable.  This kind of event has never happened before, because the U.S. dollar was never hyperinflated into infinity like is being done today. The same situation is true with silver. (A chart of the U.S. House Price/Silver Ratio wasn’t available.) If the median home price falls to, say, $150,000 and silver goes to $200, it will take a mere 750 ounces of silver to buy a house. 750 silver dollars will buy the average house in America within five years.Try to imagine buying a real house for $750. Even in 2002 seven hundred and fifty silver dollars only cost about $3,750. Always remember silver and gold are the only real money as defined by the U.S. Constitution. The housing crisis is only half over, house prices are falling by the day, and it may take three more years for this to bottom. It will be a very, very slow and long recovery, too. 

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Jason Hommel has been doing a brilliant job of telling the world the paper price of silver is a delusion, and the real price is about $4 higher. Do yourself a favor and go to and sign up for his FREE newsletters. They are generally short, informative, and easy to read. I don’t agree with his stock picks, but that is another matter. He has exposed the fact the Perth Mint, Barclay’s Bank, Kitco, the ETF’s, and others have been selling paper silver with no real backing.

Warren Buffet is still going broke with his famous Berkshire Hathaway stock. It lost 27% from peak this year. The media keeps trotting him out as the Wisest Man Alive while his stock goes to hell daily. Moron oil baron T. Boone Pickens keeps telling people to invest in windmills (!) while his hedge fund lost 84%. True unemployment is at least 14%, and not 6% as the government tells you. Many people have jobs they are overqualified for just to pay the bills. The government is finding it harder and harder to lie about the jobless numbers. During the Much Greater Depression at least one fourth of every work will be jobless. The GDP Gross Domestic Product) isn’t up 3.3% as the official figures tell you; it’s down a good 1% and falling. True inflation is still running about 16% based on unpublished M3 money counterfeiting. 

Look at this rhodium price chart from 2000 to present. No one saw this coming. Rhodium skyrocketed from about $500 an ounce to over $10,000 an ounce in about four years. This is The same kind of thing silver is doing and will continue to do. The point here is that rhodium is a vital and necessary industrial metal like silver only much less important. This went up twenty times in less than four years. This proves the price potential of any needed industrial metal when demand exceeds supply. 

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117 banks are on the FDIC “problem list”, and many others are failing as well.  The FDIC admits we could see 300 bank failures within the next 16 months. Many banks are still successfully trying to hide their losses. That will soon end. Want to get rich? Open a motor scooter dealership and repair. as this is the transportation future in America. This is what you see middle class people in Europe commonly doing even in the dead of winter. Get a dealership for little crap plastic pretend cars like Fiestas, Tatas, and Smart Cars.  This is all middle class Americans will be able to afford soon. America is not set up for public transportation at all except in some cities. Banks cannot lend now, as they have no money and are loaded with the bad mortgages they made. One tenth of all mortgages in America are in trouble today, and are late or can’t make payments. One in ten households are going to be homeless soon. Apartment rentals are thru the roof. People simply can’t afford their own house unless they share it with others. This is just going to get worse. The housing collapse is only half over and probably has about three years to go. Around 2011 you will be able to pick the house of your choice for a quarter on the dollar based on 2005 peak prices. California median home prices fell 43% in a year from $4587,560 to $350,760. That is 43% in one year folks. The state of California is officially broke by the way, completely and totally bankrupt. The GNP of California exceeds that of 90% of the countries of the world, and they are hopelessly under water. We just had the seventh anniversary of 9/11, and you can expect another disaster any time. We asked all our readers over a month ago to put away at least four 5 gallon storage cans of gasoline if they could. This is just good practice. Now you see gas stations closed and out of gas, and the price over $4 a gallon. Keep at least 20 gallons of gas safely stored and use it within six months and refill the cans. (Gasoline does not store long term.)

Every day we come closer to attacking Iran. This will be the worst mistake the U.S. made in the last 232 years, and they will retaliate viciously to defend themselves. An entire American city could be vaporized. Biowarfare could be used, and that includes plagues such as smallpox. We are going to regret this. The great majority of Americans are against attacking Iran, just as they are against the Iraq war. It’s going to happen, but we just don’t know when. The majority of the House and Senate are already behind this. The Iran war comes closer every day. We just sold Israel one thousand GBU-39 bunker buster smart bombs. There is only one reason to have these, and that is to attack the fortified bases in Iran.  Iran is not going to roll over like the Iraqis did; they are going to retaliate in a way that will make your blood run cold. There is no longer a government by the people or for the people.

The U.S. dollar and stock markets are being propped up by the government. This will end after the election- if they can keep it up that long. Even Jim “Mad Money” Cramer admitted the stock markets are rigged. Of course he wants you to buy windmill stocks and other such brilliant investments. The dollar is now 80 cents in the basket of international currencies and will fall under 50 cents. The stock market cannot hold 11,000 and is headed for 5,000. If you have an IRA or 401k you must either convert it to American silver stocks or dump it. Take the tax bite and invest the 60% into the eight silver stocks we talk about. The nationalization of Fannie Mae and Freddie Mac will just make the housing crash worse, not better. It will cost every man, woman and child about $30,000 each for this trillion dollar boondoogle. It could end up much worse than one trillion. This is the worse economic event in the history of the world, not just the United States. You, the taxpayer, is paying the bill. They should have been allowed to fail in a free market. Greedy people buying houses they could not afford, and greedy banks giving them money they didn’t deserve. The media is telling you how “beneficial” it all is. You cannot bail out anyone in a free market.

There are only about 50 actual silver mines in the world. Three fourths of them simply aren’t worth investing in for various reasons. There are good reasons not to invest in some of the well known ones such as Silver Standard, Coeur d’Alene, Hecla, Apex and others. There are eight that stand out. These are Quaterra (QTA), Silverstone (SST), ECU Silver (ECU), First Majestic (FR), Endeavor (EXK), Impact (IPT), Genco (GGC), and U.S. Silver (USA). All are Canadian except Endeavor, which Is American. Six of the seven Canadian stocks do trade on major U.S. exchanges as well. If you have a 401k or IRA ask the fund manager if you can convert to the American silver stocks of your choice. The prices of all precious metal stocks are very, very down, and they are stunning buys now. If you bought them earlier and lost money just hold on, be patient, and they will recover dramatically and then take off. Meanwhile please go to and read the weekly commentaries so you will know what I going on. Then you will be confident you are doing the right thing and your money is in the best place possible.

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