Silver to become EXTINCT by 2020...

Now this is a pretty strong statement. This 'fact' is being bounded around the internet quite a lot at the moment and so with all bold headlines like this, one needs to be wary. This is where you need to get your Due Diligence hat out and do some digging around before you take any action upon it because I'm sure there are many Silver dealers out there who have just used this 'fact' (without investigating it) in order to sell more Silver. So let's break this down a bit. It all started a decade ago when the US Geological Survey published a report that Silver could be totally exhausted by the year 2020 and that it was looking likely that Silver would be the first element on the periodic table to become extinct! As you can imagine, this caused a ruckus amongst the investing/Silver world and the majority of links on Google about this, stem from that very statement from the USGS. However, what a lot of sites fail to mention is that a few weeks after this statement, the USGS released an ammendment to their Silver comment and stated that Silver wouldn't be 100% exhausted from the Earth's crust, they just meant that by 2020 it would be economically unfeasible to mine for more Silver at those prices (roughly $4 an ounce).

So is this 'fact' true then?

Partly. Well it really depends what source you look at. There are several notable Geological companies/organisations around the world that specialise in analysing minerals and the Earth etc and all the results vary. In fact, if you look at the most recent USGS report from 2011, it now states that there's around 17 billion ounces of Silver left in the crust. So with the world consuming roughly 1 billion ounces per year, that indicates another 17 years before Silver becomes 'extinct'. As I said, different reports issue different figures and after hours of Googling (I made it to page 24) the general consensus does indicate that we have anywhere between 8-17 years left of Silver reserves in the Earth's crust. HOWEVER, we can't just stop there. There's a lot more to this scenario to appreciate.

The USGS wasn't incorrect in stating this, they just lacked a bit of detail to their fact. Either that, or people in general have ignored the finer details. There's a big difference between Silver becoming extinct and Silver becoming economically unfeasible to extract. Despite it's increasing rarity due to huge global consumption, Silver will never become 'extinct'. It will always remain in existence in the form of posh cutlery, ornaments, antiques, electronics, clothing and medicine etc. But there will come a time whereby it's economically unfeasible to extract more Silver from the ground. At this point, to all intents and purposes, (especially for investing) it will have the same effect as becoming extinct. It's at this point where I wouldn't be surprised to see crazy Silver prices like $10 000 an ounce and upwards. Rhodium entered a similar situation between 2004-2008. There was a global deficit in supplies and so it went from $500 an ounce all the way up to $10 000. And Rhodium isn't even half as in demand as Silver.

So how long do we have then?

This is where the USGS is partly correct. There may be around 15 years left of Silver in the crust, but we only have about 7-8 years left of economically feasible Silver to extract (at these current prices). You see there's a common misconception in the rare earth mineral world between rarity and scarcity. Silver is very rare in the periodic table, but it's also extremely scarce. This means that the Silver deposits in the Earth's crust are of small volume and are scattered all over the place. As a result of this 'peppered' location of deposits, it's just a waste of time/effort and money to set up a drilling operation for such a small return. So normally they don't bother. It's like being in a football stadium with loads of 1p coins scattered around it and there's a few stacks of £20 notes dotted around. If you only had an hour to collect as much cash as possible, you'd just go straight to the big deposits of money and would ignore the 1p coins.

Also due to Silver being extremely undervalued and under-priced at the moment, Silver is simply a byproduct of base metal mining operations like copper and zinc mines. These companies just get small amounts of Silver and sell it on for minimal profits. Also a lot of people are unaware of how time and money consuming mining is. From the moment a feasible deposit is found, it normally takes 7+ years to set up a producing mine! So we do effectively have 7-8 years left of Silver available.

BUT...

There's more to this story. What a lot of people have overseen (including the USGS) is the availability of diesel. 97% of all transportation in this world is completely reliant upon diesel. This is mostly because trucks and lorries are the backbone to our way of modern life, which is why nations go to war for oil. It's the 'Weetabix' of every country and more importantly, mining operations are 100% reliant upon diesel. No diesel = no mining. So how are diesel/oil reserves doing I hear you wonder? In a word: badly. How bad? Well you remember when BP messed up and spewed oil all over the Atlantic in 2010? That Deepwater Horizon oil reserve was one of the largest oil finds in recent history. Probably within the last 15 years at least. So even if BP managed to extract every single barrel of oil from that oil well, it would only be enough oil for just 24 HOURS of world consumption! I won't labour the point, but the human population is in exponential growth as is our consumption of oil. But oil reserves are dwindling fast. Please read my previous article, 'http://siamkidd.blogspot.co.uk/2013/01/nuclear-power-shale-hype-and-ignorant.html' for more info on this. But if we continue with the rate of wars waged as we've seen, and with oil reserves as it is, I wouldn't be at all surprised if we only had about 5 years left of feasible Silver to mine due to rapidly increasing oil prices. Just putting it out there...but only time will tell...

CONCLUSION

In a nutshell, the USGS were partly correct. We currently have about 15 years left of Silver in the planet, but we only have about 7-8 years left of economically feasible Silver available for extraction. So combined with Silver being far rarer than Gold in investment form, prices need to increase 1000% before dedicated Silver mining operations start and the world is now buying 3 times more Silver than Gold, the next 1-5 years are going to be extremely interesting...

In the meantime, I'll continue building my financial Ark of Silver and Gold in preparation for this economic Perfect Storm brewing in the horizon...

Keeping an eye on the markets, so you don't have to...

Investor's Insight is out now! If you'd like to receive a copy through the post every month for FREE, please email: siamkidd@ukbulliondirect.com with your postal address.

Apple is screwed...

Back in 2012 I indicated to my subscribers that one should be extremely careful about buying Apple shares. This was around the time that Apple shares hit an all time high of $700 and pretty much every other person and their dog that I spoke to had bought their shares or was about to start piling into it. The general consensus was that Apple was a great company with great products, it's outperformed nearly every other share out there and that they were still producing innovating products. And if you said or thought that, you'd be quite right. They are a very profitable company and have completely revolutionised pretty much every industry they've jumped into like portable music players and phones. To be honest, I used to be a bit of an Apple junkie and had iPhones from the start, all the way up to the 4, but I'm afraid the prices of a share go far deeper than being a 'great company with great products'. To an extent it's about supply and demand of the said share but Apple was always doomed for being a bubble once it got the attention of mutual funds and hedge funds. Its own fame was its nail in the share price coffin...

You see it really doesn't matter what the company is or what it does once a few big mutual funds targets it. I'm being very general here, but what tends to happen (mostly in the States) is that people with a bit of spare cash to invest go to a mutual fund and speak to an investment advisor. These advisors are normally just sales people and just pump whatever stock is paying the juciest commissions. And if the mutual fund is quite big, the chosen stock normally starts to rise. This attracts more investors and there you go, you've got your bubble started. Netflix is a key example of this. However there's only so much interest and people to buy a certain stock and you normally get to the point where there's simply no one left to buy this new super stock. But the hedge funds (normally coined as the smart money) notice this as they tend to be ahead of the curve and exit the stock to realise their profits. This doesn't help the bubble stock one bit and the price tends to start falling. Then you eventually get to a pivotal point where everyone starts a mad dash to try and grab their profits before it crashes even further and the rest is history. This happens all the time to good and crap companies and I'm afraid to say it Apple lovers, but Apple is a bubble. I called the top of $700 and said it would probably fall to about $400. Well looking at the price today, it's crashed down rather fast to $452. That's a huge 35% loss in the last few weeks.

But surely it'll rise up again?

No is the simple answer. In order for Apple shares to climb to their previous highs, there needs to be some intense economical stimulus like QE5, or Apple needs to completely revolutionise another sector...perhaps TV? But the main reason why there is next to no hope for them is due to the Nasdaq 100. This index is simply an average of the 100 biggest/most traded tech companies in the States like Google, Apple and Amazon etc. So when the Nasdaq is going up, US tech companies are doing well and vice versa. However when you look at the weekly chart, we're seeing a textbook Head and Shoulders set up. In a nutshell, this is a very strong (and reliable) reversal signal. So it's very likely that in the next few months, we'll see it testing the neckline. If this then breaks below it, this will then start the long anticipated market correction I've been talking about for the last few months. It'll bring down the other indexes like the S&p 500 and the Dow.


Summary

I'm currently shorting Apple and the Nasdaq. Getting ready to short the S&P and the FTSE and for anyone reading this, please have a long hard look at your current share portfolio. In particular, look at their history. If your share did well during the 2008 and 2010/11 crash, you may be ok, but if it didn't, things could get rather stressful for you in 2013.

Note: I am completely out of the stock market. I only trade on the movement of it and the only things I invest in is physical Gold, Silver and Melina trees.

Nuclear power, Shale Hype and Ignorant World Leaders

I didn’t really pay much attention to the US elections a few months ago, but what I did hear which interested me were the blatant lies/propaganda that both sides were saying about energy and oil. This of course caught my attention. Romney in particular pressed on that we’re about to have a ‘Shale revolution’ and that the US will be oil sufficient within 5 years and that the US has about 500 years’ worth of Shale gas. Now Shale gas has been a favourite topic of investors, commentators and mainstream analysts – many of whom claim we are about to enter a new energy era with cheap and abundant Shale gas leading the charge. So is Shale going to be the wonder energy to replace crude oil and save us from our ‘Peak Energy Cliff’? Or is this just going to be another bubble? So to save you the effort, I’ve been quietly doing my due diligence into this sector for about a year now and on closer examination of these incredible claims/figures and things just don’t add up. So we’ll quickly go through:

 

•         Shale…how goes it.

•         Why Japan can’t afford to abandon nuclear power.

•         Why green energy won’t make a meaningful impact for many years.

•         Why Romney and Obama know next to nothing about fossil fuel energy.

So how are things shaping up for Shale at the moment?

Well a lot of investors from particularly the oil-rich parts have been making some pretty high-risk investments in the United States for many years and, for a long time, those investments were in real estate. As we know, a lot of people/organisations got burned with US real estate in 2008 so now a lot of these investors have shifted their focus and are putting funds into Shale. There are 3 pertinent things going on here:

i.)                  This capital isn't going to last forever, especially since Shale gas is a commercial failure. Shale gas has lost hundreds of billions of dollars and investors will not keep on pumping money into something that doesn’t generate a return. These type of investors aren’t ‘day traders’ but they definitely don’t invest like Warren Buffett (buy/invest and hold forever). They’re in this for profit/capital appreciation/dividends and cashflow. Shale isn’t providing any of them at the moment other than hope and potential.

ii.)                People always ignore the decline rates that Shale reservoirs experience. Well, I've looked at this and the decline rates are incredibly high. In the Eagleford Shale, which is supposed to be the mother of all Shale oil plays, the annual decline rate is higher than 42%. That means they're going to have to drill hundreds, if not 1000 wells in the Eagleford Shale, every year, to keep production flat. Just for one play, we're talking about £6-8 Billion a year just to replace supply. When you add all these things up and it starts to approach the amount of money needed to bail out the banking industry, where is that money going to come from? The Fed certainly isn’t going to print it for them. They’ve got their balance sheets full already buying toxic T-bonds that the world is now shying away from.

iii.)              Quantity vs quality. Yes there may well be 500 years’ worth of Shale in Northern America, but how good is it? I.e. How many joules of energy do you get back for every joule you put in to extract it? If we go back 100 years to the Goa fields of Arabia, the sweet crude they got there gave them about 99 joules back, per joule spent. Where are we now? Crude right now is only giving back about 6 joules if we’re lucky. Shale? 2 – 2.5. How long will Shale last where it’s economically feasible to do so?

So on the outset, things don’t look too peachy for Shale at the moment. And with all of this hype that’s constantly bounded around about Shale, especially now that Romney and Obama were talking about it, I’m afraid that this is looking prime for becoming a bubble.

How quickly could this bubble pop?

Well, it depends, as with all collapses, on how quickly the collapse occurs. The worst-case scenario would be that several large companies find themselves in financial distress. A large company called Chesapeake Energy recently had a very close call. They had to sell billions of dollars’ worth of assets just to maintain paying their obligations. So if this can happen to Chesapeake, it’s highly probably that if a couple of big bankruptcies occur, these investors will pull back, all the money evaporates, all the capital goes away. Goodbye Shale. For the time being anyway. But of course, that’s the worst case scenario and no one has a crystal ball, but this is a probable outcome. Am I putting my own money on the table? No, not yet. I won’t be shorting it either, but it’s definitely something to keep an eye on. I’m currently all-in on Silver at the moment.

If Shale had its 15 minutes of fame in the US elections, surely there must be some substance behind it?

Mitt Romney really pushed and talked about how the US would be able to achieve energy independence in 5 years. Well, I know he’s a big deal over there and I’m an average Joe in Norwich, but that's simply poppycock. Anybody who knows anything about oil, gas and coal, knows that that's absurd. The US were producing a little over 6 million barrels a day thanks to an all-out effort in the Shale oil play. But the US consumes 15 million barrels of oil a day and that leaves the gap of 9 million barrels per day. At the peak of US production in 1970s, they only produced 10.6 million barrels per day. So I’m afraid he really doesn’t know what he's talking about, or he was just willing to say anything to get the votes.

So if not Shale, what about Nuclear energy then? Should we ditch it like Japan and Germany?

No. I’m not a nuclear expert, but from my research, Japan is a special case. For a start, the Fukushima reactor was right on top of a major fault line. So, that seems to be an incredibly dumb place to put it. And to completely abandon nuclear power because one reactor was stupidly planned, to me, seems like a bit of a knee-jerk reaction. But who knows what’s going on behind the scenes in the Japanese government. Their currency is crashing, they’re on QE9, they’ve been hit full on with a natural disaster and the economy has declined for over a decade now. And here are the bones of Japan’s situation:

i.)                  They have no oil.

ii.)                They have no coal.

iii.)              They have no natural gas.

So if they get rid of nuclear energy, what are they going to do? I don’t know why no one’s really asking this question? If you don't have anything of your own, how are you going to get what you need? The answer is that they have to import LNG and that's very expensive. Right now, natural gas is selling in Japan for $17 per million BTUs (British Thermal Units). You can buy the same BTUs in Europe for $9 today or in the US for $3. They’ve also started piling billions of Dollars into Solar energy (which is great for Silver prices), but the energy provided from that barely compares to the power that their nuclear plants produce. It’s like trying to power a car with a hamster wheel.

So that brings us nicely to Germany and for them to abandon nuclear…that decision is truly delusional because they haven't had any problems over there. Nor is Germany particularly earthquake or tsunami prone. They have forced themselves into a love relationship with Russia so I think that either I’m missing a big piece of the puzzle here or there are deals going on there hidden from public view. And with the dodgy track record of these Russian oligarchs, that doesn’t seem that crazy. Just follow the money…

So what about renewable energy sources then? And what about future technology?

Now I have all the enthusiasm and hope for technology as we humans are pretty clever. But a good rule of thumb that I heard once is that if it's not on the shelf today, then a solution is no sooner than 10 years in the future. So, when people talk about fancy algae, storm energy harnessers and A Rossi’s E-cat machine, just bear in mind that it's not on the shelf today. So yes, eventually we’re going to have some ingenious solutions, especially with the discoveries of Graphene and Silicene, but simply nothing is going to help us in the coming 5-10 years.

Whilst we’re on the topic of energy, something that slightly annoys me is that environmentalists talk about the evil of fossil fuels and the carbon emissions that they produce etc, but have they really done their research to see how vital it is to pretty much everything that we base our modern lives upon? For instance, pretty much 97% of any goods or products revolve around trucks and lorries. The food in your fridge, the fridge itself, your newspaper reading glasses and pretty much every object you can think of has been created using oil and delivered to you by oil (diesel). So I’m afraid we as a species is hooked on oil and our dealer (Earth) is rapidly running out of supply. In my opinion, prices for anything tangible like Gold, Silver, Timber, Gas, Oil and also renewables can only rise in the medium to long term. These are great prospects if you’re an investor or newbie investor.

I’m aware that Governments have the best and brightest advisors who know a lot more about their respective fields than I. But this is just my 2 cents on it all. So to summarise, we need nuclear power, Shale is probably going to be a bubble, we need to pay more attention to world oil consumption/supply decay and politicians know next to nothing about the markets!

Silver to rise over 500% in 3 years - BBC

It looks as though Silver is beginning to slowly enter the public arena with this short BBC piece on Silver. A lot of people get a bit confused with Silver. Whilst a lot of people agree that it will rise extraordinarily if we suffer a calamitous economic collapse, for Silver to rise, we do not actually need a market failure. Even though a crash of some sort would speed up the Silver rocket, one has to bear in mind that currently only 1% of the world is investing in it. If just another 1% (140 million people) buys just 1 ounce of Silver (£30) in the same year, that would create a huge squeeze in supply and demand which would send Silver to at least $150 an ounce (500% increase). The US is already experiencing a semi squeeze as its US Silver Eagles are selling at all time highs (which is creating considerable delivery delays for us dealers) and the world is now buying 3 times more Silver than Gold. And with the Gold to Silver ratio now 55:1, this ratio simply cannot last. But if we take this just one step further, I personally don't think we need another 1% of the world to start investing. If just a handful of the worlds richest families cottoned on to Silver....that may just do it. Having said that, the pension schemes in Japan are now about to allocate just 1% of the nations pensions into physical Gold and Silver. That's a huge amount of metal that will be delivered to Japan. 2013 is going to be a very interesting year...

'You're an idiot if you believe in Silver price fixing' - really?

Recently, I found out that one of my 'friends' had been talking behind my back about how I was some sort of 'conspiracy nut' and that my video www.HedgingAgainstUncertainty.com was just some elaborately long sales and propaganda video. I'm not one for discord but suffice to say I confronted him about it all and that conversation sparked several issues which I thought were good lessons in terms of market knowledge/conspiracies and trust. So let's start with the conspiracies.

This topic always makes me chuckle as it's human nature to be cautious of something you're unfamiliar/have no knowledge of. Just like in the old days (or even today), technology in remote tribes would be construed as sorcery or magic. The same applies to conspiracy theories. Yes, there are a lot of 'nuts' out there who believe in all sorts of crazy things (like Scientology), but there are lots of conspiracy theories that have actually been later proven to be true. Events like the CIA's 'Project MKULTRA', the Enron scandals and even more recent, the huge LIBOR scandal. If I said last year that the biggest banks in London were working secretly together to manipulate and fix interest rates, you'd probably take that story with a huge truck of salt. But sitting here in 2013, we've seen that it was in fact 100% true. In fact it was larger and more horrid than initial thoeries suggested. We now know that the City of London is one of the most corrupt places in the financial world,  UBS have also been naughty and HSBC has been caught money laundering for terrorists and drug cartels in Mexico. But this is nothing new. What you'll find when studying cycles and history of finance, is that during the lead up to huge economic shifts, these 'conspiracies' occur a lot more frequently and a fair percentage of them end up being true. There were numerous financial scandals proven to be true in Germany in the lead up to the Nazis taking over, Zimbabwe during their hyperinflation and also in Argentina. It's rife. When there's large sums of money and/or power in the mix, there's bound to be some greedy crook lurking in the background. So what should we believe in these days? Well with life and in investing, I'm always open-minded. The moment you become narrow-minded, you can sometimes find yourself drinking your own 'Kool-aid', so when these new 'fanciful' conspiracy theories pop up, I now pop on my Sherlock Holmes hat and investigate it with an open mind and armed with Ockham's Razor. This razor principle pretty much means that one should believe the most plausible solution until this solution is proven otherwise. Or the one with the fewest assumptions in the equation.

So I'd now like to share with you a comment and a bit of background about my 'friend' I mentioned earlier. I've known him for about 5 years, he's a hard working professional. Good at what he does, earns well, gambles with online poker and also dabbles in the Stock Market. He's also lost a lot of money in the Stock Market. NOTE: Anyone who says that they dabble with stocks and shares is more often than not in the red and has now resorted to a buy and hold principle in the belief that their share is a 'ten bagger' and will recoup their losses.

So in this conversation he said something along the lines of:

"You must take me for a fool trying to get me to believe that all of the worlds banks are conspiring against us by actively manipulating and suppressing Gold and Silver prices. They just have no need for it, it would be too obvious and so many people would have to be in on it."

Well for someone who knows very little about the Gold and Silver market, this is actually a fair assumption. He's sub-consciously applying Ockham's Razor which is good. However it was obvious that he was being very narrow-minded and stubborn in his stance and no matter what I next said to him would convince him otherwise. So I didn't bother. It's not my place to convert people into 'believers'. All I do is present the facts and when they come to an informed logical conclusion and want help in investing in precious metals, I can then guide them. However, as a friend, I couldn't help but think that despite him having a good job (which he'll probably do very well in the future) he should know about this stuff as what happens in the Gold and Silver market may very well affect the economy in a huge way. This will then affect his job. I literally had a whole list of things in response to his statement like:

i.) If Barclays and other international banks fix and manipulate interest rates, it can also be done with Gold and Silver prices.
ii.) If UBS can commit fraud in Sep 2011 by losing $2 Billion from unauthorised trading and then covering their tracks, it can also be done with Gold and Silver.
iii.) If the Federal Reserve can 'LOSE' $9 Trillion, then fixing Gold and Silver would be relatively simple.
iv.) If rising Gold and Silver prices directly indicates to the public that the banks are doing a very bad job at managing the currency supply and are also losing them billions every day, why wouldn't they fix the prices?
v.) In the 1960's they had the London Gold Pool whereby in order to keep the structural integrity of the Bretton Woods system, the worlds banks openly fixed, suppressed and manipulated Gold prices in order to keep Gold at $35 an ounce. If it's been done before, why is it so hard to believe now?
vi.) There HAVE been whistle blowers. Andrew Maguire was a 40 year trader and former Goldman Sachs trader. He testified in court, '"JP Morgan acts as an agent for the Federal Reserve; they act to halt the rise of Gold and Silver against the US dollar. JP Morgan is insulated from potential losses (on their short positions) by the Fed and/or the U.S. taxpayer." He then went on to give detailed reports of how they do this and even predicted when the next round of price fixing would happen. And it happened exactly how he said. It's also coincidental that there was a hit and run incident soon after he gave his evidence....
vii.) Due to JP Morgan's vast short positions on Silver, it's been reported that for every Dollar that Silver rises in price, JPM loses $100 million. I'm still trying to verify this statement, but even if this was partially correct, why wouldn't they fix the price of Silver?
viii.) It's very obvious when they slam Silver prices. Just cast your eyes back to a post I made a while back.

I could go on, but you've probably got the hint. It's probably fair to say that my 'friend' has a lot of reading up to do if he is to ever fully understand this market and make an informed opinion of it or even profit from this information. But this also brings us nicely to the point of TRUST.

From bad experiences, I've adopted the rule that in the world of investing, you shouldn't trust ANYONE. Even more so if a person is trying to sell you a financial product. Even if they're a fully qualified Financial Advisor and have a plethora of letters after their name and they work in a fancy corporation. At the end of the day, they get a commission from products that they promote. (For IFAs reading this, I'm aware of RDR - that's for another blog post later). So if you do invest or are thinking of trading/investing in something whether it's Timber, Stocks or Silicene, it's worth approaching the investment how I do with conspiracy theories: open-minded and investigate the investment until you know everything about it. Then only invest once you have a solid reason(s) why you're putting your hard earned money into it. So going back to my 'friend', one of the reasons why he found this Gold and Silver malarky so hard to believe is because he probably didn't trust me (a bullion dealer). Which is good. At least he's doing something right!

What the Fiscal Cliff is and why this 'solution' is a joke.

Unless you've been living under a rock, you would have most likely heard about this 'Fiscal Cliff' dilemma in the States. Your first reaction may be 'if this is a problem over the pond, why should we be worried/bothered?' Well as explained in more detail on www.HedgingAgainstUncertainty.com - when the US sneezes, the world catches a cold, so it's kind of a big deal. If the US falls back into recession, guess what's likely to happen on the world stock markets? And the answer isn't up...

So in simple terms, what is it?

I always view politics as simply a high school popularity contest. When you remove all the fancy jargon and big job titles etc and view politics in this perspective, things can be a lot easier to understand. So between 2001-2003 President Bush got into power and started losing favour amongst the people pretty quickly. People weren't happy with the wars (until 9/11) and they were rapidly expanding the currency supply to pay for all of these Middle Eastern excursions. So in order to gain favour, Bush simply instigated some rather hefty tax cuts across the whole spectrum of taxes. The result? He became the classroom's favourite leader again and US debt and deficits began to increase at a faster pace.

Then what happened is that when the expiry date came near, the tax cuts were simply continued. This was similar to buying a large round of drinks on a night out and putting it on the tab. Then when the bar man wants to call your tab in, you just put another round of drinks on it.

So what is this cliff bit?

Well like with any form of borrowing and lending, there's always a limit. And in a nutshell, we've now reached that limit. So the barman has now refused to sell anymore drinks until you actually pay what you owe.

Haven't they come to a solution?

No. Not at all. They've had this massive looming elephant in the room for a decade now and all they've done is kicked the can down the road for another 2 months. They made a big hoohah about leaving it until the 11th hour before coming to a solution but they've just postponed making the hard decisions. What they've done is keep the tax cuts for families earning under $450 000 a year and haven't reduced any government spending. This will result in an extra $4 trillion in debt over the next 10 years.

What's likely to happen now?

Well looking at the charts, the market is showing that it's now 'risk on' so we'll likely see vast rises in the stock markets as we've already seen with the FTSE 100 crashing by over 100 points to 5860 before the Cliff and it now jumping up to over 6020. So in 2 months when the Vice President has to 'sell' this solution to the Senate, Fiscal Cliff 2.0 is likely to be a lot worse with a possible debt ceiling being in the fray. In the medium to long term, I'm still expecting a huge stock market crash in 2013, so if you are thinking of buying any stocks, just make sure you know exactly why you're about to do so. And definitely do a double check if you're about to buy Apple shares!

So what's this whole 'Debt Ceiling' about then?

Simply put, due to the Petro-Dollar arrangement with Saudi and OPEC (will cover this in future publications-very interesting stuff) the US has been able to essentially get free oil for the last 40 years. This is because all oil transactions have to be done by the Dollar (until recently) and so whenever the US needs to import oil, it just prints off a few billion Dollars. Also, the Fed has just been printing more and more currency willy nilly. The US has had lots of wars to pay for with fake printed currency, trillions in military research and all sorts of other Government programs. They're currently running with over $120 Trillion in unfunded liabilities and a few years back, the Fed somehow 'LOST' $9 Trillion! YouTube 'Fed loses money', the hearing is eerily hilarious. As a result of all of this spending, they US debt is now over $16.4 Trillion. To put it into context, if the US was an average man earning $20 000 a year, his equivalent debt would be over $200 000. This would lead to insolvency very quickly and that’s what's happening with the US. But debt just can't continue rising unchecked indefinitely, there's always a limit. And that limit is nearing rather quickly. A good analogy is that if a sewage pipe broke under your home and your house completely filled with excrement to the ceilings. Would you raise the roof or would you remove the shit....?

Someone else who knows what's really going on...

This is one of the best interviews I've listened to this year. It's very warming to see that other people a lot smarter than myself are also singing off the same hymn sheet!

This is 48 minutes well spent...

$3 billion worth of Gold - Tungsten filled?

Ever wondered what large amount of Gold look like?

Here you go...

Gold supply decreasing, demand increasing = ......

Everyone knows that in a commodity, when the supply decreases and demand remains the same or increases, the price of that commodity will rise.

So with that and mind, I'd like to draw your attention to this article:

http://www.bloomberg.com/news/2012-12-11/south-african-gold-output-plunges-by-46-as-strikes-close-mines.html

Silver Update - 11 Dec 12

Haven't been able to post an update for a while but here's a quick rather broad update on general sentiment. Hope this helps.

SAS Soldier now free...

It's an absolute travesty that this whole event even happened. I love this country but it really does do some stupid things....a lot of the time!

Glad that he's back now...

The Fed lost $9 Trillion...watch them squirm...

If you fancy having a laugh, watch the Fed squirm under questioning. This really is a joke...

Fake Gold popping up everywhere!

There have been a lot of cases of fake Gold popping up everywhere and even from world famous Bullion Dealers. That's the problem with selling second hand bullion, so if a bullion dealer tries to sell you second hand coins/bars (especially bars) be very careful. There's more of a risk with Gold than Silver, just like you don't see many fake 5p coins, but you tend to see a lot of fake £20 notes. It's a case of the fraudster's time/cost/effort for ROI. Hence why I always stick with Silver 1oz Government Mint coins. I've actively sought to find a good fake Maple Leaf or American Eagle on eBay and can't find any. Fake coins like this are normally very obvious. Good fake coins are rather hard to come by...(which is a very good thing!)...

Picture of overtly blatant Silver manipulation...

This is a textbook example of Silver suppression. Silver has been moving upwards rather strongly and is threatening the key $35 level. Therefore JP Morgan nearly always tries to suppress this by smashing it down by dumping millions of ounces of fake paper Silver onto the market in a very short period of time. It drops the price and then the high frequency robot traders picks this up and amplifies the move to silly proportions! And this large move here happened in less than 5 minutes!

However it's rather promising that the price shot straight back up though. This shows great upwards strength. The next few weeks will be very interesting, especially as the festive months are historically very good for Silver prices...

Also, the speculative side of me is thinking that this was also a very large stop run. Basically the powers that be can actually see where everyone's stop losses are, so a stop run is where the market is driven down or up to stop people out (get you out of your trade) so that a large order can be conveniently filled...

Last Free Seminar - Northampton

This is just a shameless plug for my last free seminar which is being held in Northampton. There's been such a great response from these seminars so far and I'd love to meet you if you come along. You can grab a seat here: 

www.profitingfromfallingmarkets.eventbrite.co.uk

Short term Silver outlook

Just a quick heads up...

The media is very slowly catching up...

A thank you for one of our followers who sent me this link today : http://www.dailymail.co.uk/money/investing/article-2237878/MIDAS-SHARE-TIPS-Gold-quintuples-years-rising.html

It's nothing that we don't already know but it does appear that Gold and Silver is slowly creeping into the media's attention. However they always miss out on what's going on in the Silver market. Gold is a smart move, however the smarter investors are investing in Silver due to the hundreds of reasons stated in www.HedgingAgainstUncertainty.com 

And in case you haven't seen what's happening to the prices...here's the latest:

Silver Price To Increase 400% in 3 Years

Just came across this article in the Telegraph. Seems as though the larger papers are finally catching up with what's going on in the Silver world...

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9672895/Silver-price-to-increase-400pc-in-three-years.html

Is Apple the next Western Bubble to POP?!

I've been highlighting over the last few weeks how weak the US stock market is at the moment. I've shown forecast after forecast of how the S&P 500 could/will fall - and it has. However one of the main questions I'm getting at the moment is:

"But why is the Stock Market falling? The news says things are peachy now..."

Well for a start, without sounding too crass, if you believe that we're about to grow out of this recession, 2 points, i.) Not a chance in hell. Apple, the Stock Markets and the economy are going to hell in a handbasket, and ii.) you really need to watch this is full: www.HedgingAgainstUncertainty.com paying particular attention to the wealth cycles I explain in it.

The main reasons that we've seen a slight climb in equities over the last few months is mainly due to QE3 and also the fact that the Powers-that-be are all playing the status quo game. Election years are funny times and in a 6 month period we're having the US, Chinese and German elections. So once all that is out of the way, then the drama (Europe) can then unfold. As you may have noticed, just before the US election the NFP report was unusually rosy compared to previous months and the words 'FISCAL CLIFF' were nowhere to be heard on the news.

Also, another reason the US Stock Market (S&P 500) has been relatively buoyant recently is because Apple was the only thing keeping it afloat. However with less than expected iPhone 5 sales and less than expected 'fake growth' with QE3 and other factors, the Apple bubble is now popping. And as Apple deflates, so too will the S&P500. And as the S&P500 falls, so too will the rest of the world Stock Markets. So it doesn't look peachy. Unless Apple quickly releases their new iPanel product and it revolutionises TV like it did with MP3 players and mobile phones, there's very little hope of prosperity here. Even if that does happen, I fear it will be short lived though.

So what can we do?

I never give financial advice, but in my opinion, you're playing with fire if you have positions in the Stock Market (even if you think your big Blue Chip company is super strong). In 2008 we saw at least 5 of the biggest banks in the US go under and when the eventual crisis unfolds around 2014-2017, think of 1929 on steroids. If the Internet and Google was about in 1929, that crash would have been a lot worse! So without sounding like a 1 track record, you simply can't go wrong with buying Gold and Silver bullion coins. It's in my opinion the best hedge against the greed and over-leverage of the financial puppeteers. I've attached a little overview of Apple below.