(Peru Strike, Commodity Legislation & Freedom Candidates)
Silver Stock Report
by Jason Hommel, June 2, 2008
I would like to remind my readers of the monumental sea change developing in the silver market this year as the silver shortage continues as investors turned into buyers instead of sellers in 2008 when gold topped $1000/oz. and silver topped $20/oz. and the precious metals begun to capture the attention of the masses. Investor selling used to meet the deficit in silver, because industry consumes more than the world mines. But not only are investors not helping to fill the supply/demand gap, they are widening it, as they are demanding a part of that new mine supply too, which is causing the long predicted silver shortage.
This is like what happened to Mono Lake in Nevada in the mid 1980’s and 1990’s. Rivers of water that fed into the lake were diverted to LA, and the lake began to dry up as it began to evaporate faster and faster.
The silver price should be soaring above $20/oz. right now, but it’s not, which, to me, proves the case that the silver market is manipulated by the paper exchanges.
My wife asked me, “Why don’t the silver mines raise price for silver, or stop selling silver until the price rises?” The problem with that approach is that they can’t. They have costs that they have to get back. Further, mines don’t generally produce silver, they produce ore. Refineries produce silver.
There are only a few mines that could withhold silver, or ask the refineries to deliver silver in return, instead of cash credits. Those mines are the ones who produce silver as a by-product, who produce 70% of the world’s mined silver. But for them, since silver is not their main area of business, they are paradoxically most able to afford that strategy, and yet, they are the least likely to do it, because they might not know enough about silver or might not care enough about trying to “end the manipulation” in silver, again, because it’s not their area of expertise or focus.
In fact, the largest silver mine in the world, which is a pure silver mine, the Cannington silver mine, is owned by mining giant, BHP Billiton, who is also least likely to act to withhold silver, even though it would be a great strategy for them, and although they are most capable of affording it. It seems the bigger they are, the bigger mistakes they are capable of making.
It seems that some “small miners” understand much better.
Peru, the number one silver producing nation in the world, producing over 100 million ounces, is facing a miner’s strike, due June 16th.
http://www.metalmarkets.org.uk/2008/05/30/peruvian-miners-vote-for-june-strike/
“Previous strikes by Peruvian miners have put pressure on international metals prices.”
Since the silver price has moved down since this news item, I can only assume this event is not yet being priced into the silver market, maybe also because the strike has not happened yet.
A few years ago, many hedged miners in Mexico got into trouble by hedging production at low prices, and then, as metals prices rose, workers demanded higher wages, but the company had to ask workers for a pay cut, because they were losing money on the hedges!
Miners see prices rising, and they expect a piece of the action. And they are not the only ones. Politicians, too.
Cotton-Price Swings Disrupt Farmer Sales, Spark Probe (Correct)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZkTcpcvJdkI&refer=home
Joseph Lieberman, chairman of the Senate Homeland Security and Government Affairs Committee, said May 20 he is considering legislation limiting large institutional investors in commodities markets.
The legislation would be aimed at speculators and other investors who use commodities to hedge against swings in other investment instruments such as stocks and the U.S. dollar, Lieberman, a Connecticut independent, said during a hearing.
LAWS AGAINST BUYING OIL – GOLD & SILVER?
http://www.financialsense.com/editorials/phillips/2008/0528.html
As much as I dislike the futures markets, and consider them manipulative, I think that it would cause more harm to shut them down, or to limit speculation. Well, if they limit speculation in the “necessary” commodities, I think that would tend to push investment into silver and gold, which are so “unnecessary!”
I don’t take Lieberman’s threat seriously. I think it’s actually a good sign. I think Lieberman is just noticing all the money being made in commodities, and is “threatening” certain legislation, which is sort of like a shakedown. I think he anticipates that the threat of such legislation can shake loose some kind of “campaign contributions” to get him to change his mind.
This also could be a sign of desperation on the part of the money managers. They want to print unlimited amounts of money, but they begin to cry to high heaven if people buy real limited things with the money as investments to protect themselves from the inflation.
A sure sign of impending hyperinflation is both the rush to commodities as well as the desire to ban such investments.
But an even greater sign of positive things to come is that not all politicians are so clueless. And furthermore, many more people are starting to understand the benefits of freedom.
So far, eight “freedom candidates”, out of at least 40, many inspired by Ron Paul, have won their primary elections, with many primary elections yet to come.
http://www.paulcongress.com/Candidates.html
Five of the 40 “freedom candidates” running for the U.S. Congress or Senate have primary elections tomorrow, on June 3rd. They want your vote.
California:
Theodore Terbolizard
District 4 v. (Open Seat)
http://terbocongress.org/
California:
Dan Felzer
District 51 v. Bob Filner (D Incumbent)
http://www.danfelzerforcongress.com/index.htm
New Jersey:
Dr. Murray Sabrin
For U.S. Senate v. Frank Lautenberg (D Incumbent)
http://www.murraysabrin.com/default.aspx
New Jersey:
Donna Ward
District 2 v. Frank LoBiondo
http://www.donnawardforcongress.com/
New Mexico:
State Senator Joseph J. Carraro
District 1 (Open Seat)
http://www.peopleforjoe.com/
Many of the other primary elections continue through September.
http://www.paulcongress.com/Candidates.html
Sincerely,
Jason Hommel