You shall do no injustice in judgment, in measurement of length, weight, or volume. You shall have just balances, just weights, a just ephah, and a just hin: I am the Lord your God, who brought you out of the land of Egypt.
But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
-Benjamin Shalom Bernake, Chairman of the Board of Governors of the Federal Reserve
Without self-discipline under God’s revealed laws, there can be no freedom. False weights and measures lead to unrighteousness. People who sell items to the public must be sure that they avoid giving less than what is expected—revealed on the scales—through tampering with the physical standards. In short, tampering with society’s physical standards is a sign that men have already tampered with the society’s moral standards.
-Dr. Gary North, "Honest Money"
This week I am featuring two one-quarter ounce .999 silver pieces which I picked up a few weeks ago in my local area. They are dated "600BC - 2009AD", a reference to the ancient Greek coinage that was made in Lydia, an area in western Asia Minor (now Turkey). The wikipedia entry on Lydia states:
"According to Herodotus, the Lydians were the first people to introduce the use of gold and silver coin and the first to establish retail shops in permanent locations. It's not clear, however, whether Herodotus meant that the Lydians were the first to introduce coins of pure gold and pure silver or the first precious metal coins in general. Despite this ambiguity, this statement of Herodotus is one of the pieces of evidence often cited in behalf of the argument that Lydians invented coinage, at least in the West, even though the first coins were neither gold nor silver but an alloy of the two. The dating of these first stamped coins is one of the most frequently debated topics in ancient numismatics, with dates ranging from 700 BC to 550 BC, but the most commonly held view is that they were minted at or near the beginning of the reign of King Alyattes (sometimes incorrectly referred to as Alyattes II), who ruled Lydia c. 610-550 BC."
These are interesting little bullion pieces, but I wouldn't pay much over spot for them so personally I wouldn't pay their retail price of about $4/oz over spot (.99 cents per coin, when you buy 100), but if I find more on the secondary market I might grab them. If it sounds like a deal to you, though, here is the website: http://www.lydianmint.com/index.html
Thanks for reading the Silver Squirrel! I've seen a big spike in traffic lately now that I am posting on a regular basis, so let me know if you like it by commenting so I have motivation to keep going!
"The National Bank of Belarus (NBB) is sharply devaluing the official rate of Belarusian ruble. The exchange rate as of May 24 was set at 4,930 rubles per dollar. a decrease of 56% from the 23 May. The National Bank of Belarus has officially confirmed a sharp depreciation of the currency."
Funny enough, I use a Belarus banknote in the "About" section of this blog because it pictures a squirrel!
I hope none of my readers are in possession of any Belarus Ruble banknotes or bonds!
"When it comes to currency warfare, one can be polite and gentlemanly about it, like Brazil for instance, which every day, and sometimes on several occasions during the day, will proceed to buy dollars in an attempt to keep one's own currency lower. Or one can do what the Belarus central bank just did, and officially devalue one's currency, in this case the Belarus ruble, by 56% overnight, against every currency out there." http://www.zerohedge.com/article/belarus-just-devalued-its-currency-56 Wall Street Journal is running a correction that is was actually 36%, not 56%. http://online.wsj.com/article/BT-CO-20110523-707809.html
Belarus was under pressure from Russia to sell state assets in order to get a credit line and bailout from Moscow, but instead they just devalued their debt! WOW! Anyone in Belarus with silver instead of fiat is doing fine, but all the fiat savers have been robbed!
Again from Kommersant.ru:
Meanwhile, representatives of Belarusian banks have criticized the mechanism of devaluation. "The problem is not in the specific value of the exchange rate and in the mechanism. The question is: under whose speculative decisions did the National Bank make this choice?" - Said the agency "Interfax-West" management representative of a bank with Russian capital. In this case, the representative of a state bank believes that "this decision should be viewed as an interim measure." According to him, "the trend is obvious: the official exchange rate will move in the direction of the OTC exchange rate, rather than vice versa."
Pimco, the world's largest bond fund, headed by Bill Gross, is now moving into equities. According to the May 23rd issue of Fortune (pg 57-58), "Money-management powerhouse Pimco has long been renowned for its experience in bonds. Equities, not so much. So when the firm announced in late 2009 that it was moving into stock picking, it scoured the globe for talent. Its first draft choices were Anne Gudefin, a veteran value investor, and Charles Lahr, partners who jointly ran the $16 billion Mutual Global Discovery mutual fund."
I am posting this because from an intellectual standpoint, I can respect "value investing." However, if Anne had been a silver squirrel over the last five years her annual returns would have been more like 25% than the 7% she made for MGD fund!
James Turk of Goldmoney.com has interviewed "renowned Wall Street trader and financial commentator" Victor Sperandeo. Here is a youtube video from "GoldMoneyNews" which shows the portion of the interview that relates to silver:
Some highlights: -Silver has been roughly twice as volatile as the S&P 500 over the last ten years. -Silver trading algorithms lose money, except very long-term ones. This is because silver is very volatile month to month, but it is ultimately drive by long-term fundamentals. -The retracement from $49 to $35 is fundamentally healthy and bullish. -65% of silver mined is used for industrial production, 35% is for investment/money. Compare to 10% of gold used for industry and 90% available for other uses. -There is very little silver relative to gold in terms of what is physically available for investment. -India has been a net seller of silver in the recent past but this is reversing. -As long as governments keep "stealing from savers" with borrowing and inflation, you must stay long precious metals.
In my last post, I began the discussionon why silver is an honest money, why Federal Reserve Notes are not, why Jesus reacted the way he did to the money-changers, and what the Bible says about silver. These are big topics that might be continued in the future. I asked a very Biblically-literate Presbyterian pastor what he though of my post and here is his response for your consideration:
"Thanks for asking me this Bill. I see no glaring errors. One additional observation about the temple clearings has to do with racism and Jewish patriotic fervor. The comment, "my house shall be a house of prayer for all nations" picks up on the fact that the money changers/marketplace was set up in the court of the Gentiles, thereby hindering the worship of God by foreign believers. The temple clearings are not only a critique of the economic oppression and idolatry symbolized by the money changers, but they also critique the Jews' tendency to exclude the nations from the redemptive plan of God, symbolized by where they had set up shop.
Let me know if I can be of further help. Thanks again -Nathan"
This isnot a religious blog per se, but its hard to avoid the moral questions that arise when discussing silver, fiat money, interest, poverty, banking, etc. Savers and investors should at least be aware of all sides before making their own decisions.
Recently we see lots of mention in American and Canadian media about how silver is the "devil's metal" (so-called because many fortunes have been lost trading it). In reality, the theft from the poor that occurs due to fiat money and inflation is the true evil. Every day they lose a little of their savings to inflation and pay higher prices for food, as Ben Bernake runs the printing presses. It is a vain effort to preserve the status quo of endless debt and deficits. Silver, on the other hand, is an "honest weight and measure" like the Bible/Torah commands and was the metal that was acceptable for giving to God's temple in Jerusalem in the Old Testament.
When Jesus overturned the money-changers tables, he was not angry at the concept of money or profit, he was angry at them for charging people a high premium for the special silver coin that was needed in order to make temple offerings. Essentially the money-changers were running an extortionist/monopolistic cartel; other Jews were required by their religion to visit the temple and there was no where else to get the coins (of course he was most angry about them defiling a house of God by turning it into a marketplace, but the monopoly made it worse). This is similar to today where the government requires everyone to do business and pay tribute in their monopoly-cartel pieces of paper and these papers are constantly losing value. Anyway, more discussion of this some other post, but here are a few mentions of silver in the King James Bible (I provide some context instead of single verses, but for full context you should go to the chapters): For the oppression of the poor, for the sighing of the needy, now will I arise, saith the LORD: I will set him in safety from him that puffeth at him. The words of the LORD are pure words: as silver tried in a furnace of earth, purified seven times. -Psalm 12:5-6
Happy is the man that findeth wisdom, and the man that getteth understanding. For the merchandise of it is better than the merchandise of silver, and the gain thereof than fine gold. She is more precious than rubies: and all the things thou canst desire are not to be compared unto her. -Proverbs 3:13-17
A good name is rather to be chosen than great riches, and loving favour rather than silver and gold. The rich and the poor meet together: the LORD is the maker of them all. A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished. -Proverbs 22:1-3
And I will shake the nations, and the desire of all nations shall come: and I will fill this house with glory, saith the LORD of hosts. The silver is mine, and the gold is mine, saith the LORD of hosts. -Haggai 2:7-8
The Bible repeatedly warns in these and other verses that A) virtue/wisdom is superior to wealth and B) Ultimately, God owns everything. But, there is nothing inherently evil in gold and silver, only in how some people go about getting them. What the Bible truly abhors is cheating the poor, widows, and orphans by moving property stones, extracting usury, requiring harsh taxes, lying, using incorrect weights and measure, and of course outright theft. This is exactly what the Federal Reserve and US Government do every single day.
"With just 45 minutes of trading left, NYSE volume will once again need to come up with an appropriate adjective to describe just how bad it is. The 2.6 billion shares traded so far are 56% of the YTD average and just under two-thirds of the Q2 average. Also explains why the levitation algo is hard at work to close the market well into the green on a day when the US economy virtually jumped the shark into contractionary mode. At this point we would once again go so far as to predict that flow and even prop-based revenue for the major hedge funds, also known as primary dealers, will come in materially below expectations...."
Is the 2 year rally in stocks finally coming to a close? I don't know, but I am not sticking around to find out! Nothing good can come from low volume, bad economic news, and the supposed end of QE2. Not to mention that even if the Fed does not raise rates, other countries are feeling the pain from inflation and will raise their own rates. I have also noticed that dividend yields on US stocks are very low by historical standards, suggesting over-valuation, regardless of the P/E ratio (since companies can always tweak "earnings" to the upside through accounting tricks, but they can't make dividend cash magically appear).
I am completely thrilled with my purchase of a Monarch Precious Metals one ounce .999 silver ingot. These pieces are simple and sophisticated, imperfect yet beautiful. There is something very old-fashioned about them, like they just came off a Spanish treasure ship in the 1600s or something. As you can see, I have placed mine over-top of an old US One Dollar Silver Certificate, which, prior to 1965, could be redeemed at the US Treasury for either a silver dollar coin, or 371.25 grains of fine silver shot. Those were the days!
I went out today looking for some silver to buy, only to be told by the largest dealer in my city that not only was he out, but that all their other locations were too. It seems the price drop from $48-49 to $33-34 has brought out a great deal of physical demand. The market is repeatedly demonstrating that the COMEX paper silver games are just that, games. The real market is in the physical and one day the COMEX will be overwhelmed by reality.
Eric Sprott has some good insight:
"Here we are in a situation where the price is 40:1, but the dollars going in to it (gold/silver) are almost dead equal, so I can't see the price ratio staying in this range."
"In the days when gold and silver were money, “saving” was actually identical with “hoarding.” The only difference was the connotation of the words. Today you can’t even hoard nickel and copper coins anymore because (unbeknownst to Boobus americanus) there’s very little of those metals left in either nickels or pennies – both of which will soon disappear from circulation anyway."
The only problem with this statement is that it is incorrect when it comes to nickels. US five-cent coins are the same composition of 75% copper and 25% Nickel that they have always been, other than the "war nickels" made during World War 2 which contained 35% silver.US nickels are perhaps the best form of fiat cash to hoard, since they are presently worth about 7 cents in metal value. As for one cent coins - "pennies"- (technically the US Mint has never called a coin a "penny" - it is left-over language from the British coins), ones minted prior to 1982 are 95% copper and worth almosty 3 times their face value. Some 1982s are copper as well, but some are zinc, it was the cross-over year. If you search currently circulating pennies, you will generally find that about 20-25% of them are pre-82 coppers. It is very prudent to set these aside and save them. Even though it is currently illegal to melt them, nothing lasts forever. And even with the melt ban, pre-82 pennies sell on E-bay and Realcent.org at a multiple of roughly 1.5x of their face value. More to come on tips regarding base metal coinage.
It seems that every time the metals and crude heat up and the fear of inflation goes mainstream, some event(s) happens in politics or the markets which cause a "risk-off" and keep the 10-year Treasury bond price stubbornly high, with a yield of only about 3.2%. If you believe official CPI numbers this is not horrible, especially considering the measly return on bank CDs and the only marginally higher return on municipals and highly-rated corporate bonds. Every time the 35-year bull market in bonds seems ready to finally turn the other way, it finds a way to stay intact. Perhaps the ending of QE2 in June will be the turning point, but supposing it causes a pull-back in stock and metals, the bond market might STILL stay strong. Its frustrating for silver squirrels, but it gives us more time to save our silver nuts!
Here is a beautiful gem from Northern Ireland! It was issued by Allied Irish Bank in Belfast. Several Northern Irish and Scottish banks have a special arrangement with the Bank of England which allows them to issue their own banknotes, backed by British Pound Sterling. Because they are naturally more rare than Bank of England notes, they are sought after by collectors.