Marc Faber, author of the Gloom Boom and Doom Report, on the same program, threw in his respected position on US treasuries:  “Even the short term for treasuries is uncertain. If I look ten years ahead, where do I want my money? Certainly not in US treasuries.”

In a program earlier in the week, Barry Ritholtz said that treasuries resemble dot com stocks of the late 1990s.  Richard Russell, editor of Dow Theory Letters, has expressed his concerns that treasuries are in or are entering a bubble.

One of the tell-tale signs of a bubble is widespread belief that that the investments in the bubble are sure things.  We need go no further back than the housing bubble when nearly everyone thought that road to riches lay in buying houses and more houses.  Today, you cannot find an investment banker that does not believe that treasuries are sure things.

I am not in the Treasury market and have no feel for it.  I will take the words of the above mentioned experts that Treasuries and other government bonds are in a bubble.  But, bubble or no bubble, I, like Marc Faber, do not want to own government debt obligations.

In the interview, Schiff also said, “The problem is there is no way for the government to pay this money back, apart from through horrendous tax increases, which could never be accomplished. Or else the government has to tell people on Medicare or Social Security that they cannot get their cheques as the government is not able to pay its interest. And it is not just paying interest – it is also not being able to roll over short term debt; they will have to retire the principal. So there will be massive inflation.”

Basically, Schiff is saying the dollar (more accurately, the Federal Reserve note we call the dollar) will be destroyed as the government prints to meet its obligations.

For decades, I have been saying that whenever a country delinks its currency from gold or silver— makes the currency no longer redeemable—politicians will print that currency until it becomes worthless.  See The Sad History of Paper Money for more on this position.

For more on the treasuries bubble, read US Treasuries now the ‘mother of all bubbles,’ a blog post on Citywire, a UK website.  The post has links to other posts and videos that explore the topic in more depth.

Although Davies sees trading opportunities, long-term buy and hold investors can take solace in Davies’ analysis.  If silver does enjoy a move still further higher in the near future, it should be a big enough move that silver would likely hold much of the gain.

Of special interest to silver investors will the seasonal graph of the price of silver.  Between September and April, silver enjoys its strongest upward seasonal moves.

Davies goes into the man’s historical fascination with silver and into the huge short silver positions held today by the bullion banks.  Although both topics have been covered many times by different analysts, Davies’ perspective is interesting in that he uses them to lay the ground work for a potential silver price explosion in the near future.

See Davies’ analysis on kingworldnews.com here.

Also on kingworldnews.com read James Turk’s views on silver price manipulation.  It’s not negative, as one might suspect.  Turk sees silver under massive accumulation.

Other death penalty crimes set to be eliminated include the smuggling of cultural relics or rare animals, trafficking in tax invoices, teaching crime-committing methods, robbing ancient cultural ruins and carrying out fraudulent activities with letters of credit or financial bills.  Such is life (and death) in a total police state.

Honest commodity money has always been the bane of the State.   Gold and silver come into existence only through the expenditure of capital and labor.  Paper money, the first form of dishonest money, can be introduced into the money supply via the printing press and the legal right to print the money.  In the United States, that right is granted exclusively to our central bank, the Federal Reserve System.

However, today the bulk of the new money that the Fed brings into creation is not printed but is result of computer keyboards.    While most people never stop to think about it, most of today’s dollars are computer entries, digital dollars that are merely electronic impulses on silicon bubbles.   Digital dollars have absolutely no intrinsic value.  At least after the Germans destroyed their currency in the great hyperinflation of 1921-1923, they could burn the money for heat.

These regulations will create a paperwork nightmare for precious metals dealers, greatly increasing our costs of doing business.  As is the case in all businesses, higher costs are ultimately reflected in the prices of the products that businesses sell.

But more ominous than higher prices, sellers will have to provide identification to dealers, such as driver’s licenses and social security numbers.  If that information is not adequately secured by the purchasing dealers, sellers could become victims of identity theft, which is a major crime today.

Further, the new 1099 reporting could endanger the personal safety of precious metals investors.  Again, if the records are not properly secured and fall into the wrong hands, that information could cause criminals to conclude that the sellers have other precious metals in their homes.

Clearly, these regulations were not well thought out, and already there are bills in the House and the Senate to repeal these onerous and invasive regulations.  To stop these regulations from going into effect, there will have to be a huge outcry – not just from precious metals dealers but from all business owners who will have to comply.

Already, trade and business associations are objecting and calling for support of the repeal bills.  However, precious metals investors should not hope that someone else gets the regulations repealed.  If the regulations go into effect, precious metals investors will be impacted much more than average Americans will be impacted.

The Small Business Paperwork Mandate Elimination Act

In the House of Representatives, Rep. Dan Lungren (R-CA) has introduced H.R.  5141, which would repeal the new 1099 requirement.   Senator Mike Johanns (R-NE) has introduced a companion bill in the Senate, S. 3578.  Appropriately, both bills are titled the Small Business Paperwork Mandate Elimination Act.

To date, 160 members of the House have signed on as cosponsors; in the Senate, nineteen Senators are cosponsoring the Senate bill.

Although the large number of early sponsors suggests the new 1099 regulations may stand a good chance of being overturned, the fight will not be easy.  The Obama administration is taking the position that increased 1099 reporting will result in increased tax compliance and, therefore, increased tax revenues.   Consequently, Americans who will be negatively impacted by the new regulations need to contact their members of Congress and ask them to sign on to the legislation.

The best way to make your opinion heard is to write or call.  Emails, although, monitored by congressional staffers are not as effective because they are perceived (and rightfully so) as being easy to send.  Letters, on the other hand, require more effort and that is known by the members of Congress and their staffers.  Because this issue does not have an impending deadline, letters are recommended.  Phone calls are good also, but letters do have greater impact.

The easy way to get the contact information for your representative and your senators is go to their official websites.  An easy way to find those websites is to google them.  For example, google US Senator Nebraska and up pops links to the websites for Nebraska Senators Ben Nelson and Mike Johanns.

Senator Johanns, as noted above, introduced the Senate bill to repeal the new 1099 regulations.  Therefore, Nebraskans need not send Senator Johanns a letter asking him to cosponsor the bill, but a letter congratulating him for having the foresight to see the onerous burden that the requirements would put on businesses.  It would also indicate to the Senator and his staff that you are politically savvy, something that tends to impress in Washington.  Senator Ben Nelson, on the other hand, is not a cosponsor, and he needs to be contacted by Nebraskans.

Further, if your senators and member of the House have signed on, you do not want to send letters asking them to sign on.   To those members of Congress who have already signed on, you want to send to them letters thanking them.  Again, this shows your political savvy.  However, it also gives them reasons to stand firm when the Obama administration comes around offering political favors if they will switch their votes.

Finding your member of the House of Representatives is easier than finding your Senators.  Go to official House website and use the map, which comes up.  A little further clicking may be necessary to determine which Representative’s district you are in.

To learn if your House member and has signed on, go to govtrack.usHR5141.  To see if your Senators have signed on, go to govtrack.us S.3578.

Most people reading this blog are doing so because their interests in gold and silver.  So, I emphasize again: the new 1099 regulations will have a major impact not only on the precious metals dealers but also their clients.  Still, the reasons for seeking repeal are not limited to precious metals dealers and their clients.

The number of 1099s that will have to be filed will be disproportionate to the precious metals industry because gold and silver dealers not only sell to their clients, but because gold and silver dealers also buy from their clients.   But, the number of 1099s generated under the new rules by gold and silver dealers will be small compared to the total generated because these rules will apply to all businesses.

If you have any comments about this blog post or suggestions about this plan of attack, post comments below.  I will try to monitor daily.  Note that a New 1099 Reporting category has been added (to the right) to the list of topics I blog about.  I don’t doubt but that there will be many comments and posts before this battle is over.

Still, there are other gold and silver investors who follow the markets closely, which usually means monitoring the activities of the large commercials (LCs), which are major players in the gold and silver markets, certainly on the COMEX where their positions have to be reported the Commodities Futures Trading Commission (CFTC).

Among the LCs, the bullion banks are the guys to watch.  They trade for central banks, investment houses, mining companies, refineries, commercial users and other large investment firms when they decide to enter the markets.  The thing to watch is the sizes of the LCs’ reported positions, which has been on the short side for more than a decade.  The big two bullion banks are JPMorgan Chase and HSBC.

For the reporting week just ended, the Commitment of Traders report (COT) showed the largest one-week reduction in large commercial net short positioning for gold since August 12, 2008, says Gene Arensberg in his Got Gold Report.  GGR notes that it’s the fifth largest one-week large commercials’ net short reduction in gold since 2003.  In the past, large reductions in the LCs’ net positions have been harbingers of price moves to the upside.  Not a guarantee, but it needs be remembered that the LCs are the big boys on the COMEX , and when they move they should not be ignored.

Seasonally, the metals have just entered their weak period, June through August/September.  So, the boys backing off on their short positions is interesting.  (In years past, the LCs have added to their short positions during the summer.)  Additionally, gold is trading only 6% above its 200-day moving average, and it is below its 50-day moving average, which means gold may not be as vulnerable to a big decline this summer as it has in past years.  So, the large reduction in the LCs’ net short position in gold may be really significant.

Arensberg’s Got Gold Report presently is free.  Log on at www.gotgoldreport.com.  In addition to analyses of the gold and silver markets, Arensberg also offers what he now calls his Vulture Bargain Hunting candidates: low-priced and high-risk gold mining stocks that he believes to be good speculations.  Purchases of such companies should only be done by persons financially (and emotionally) capable of sustaining losses.  Gene does good work, but he would be the first to tell you that speculative mining stocks are not the place for retirement funds.

GGR also offers COT Flashes, which are email updates of the COT reports.  This is a convenient way to be appraised of what’s happening with LCs’ short positions in gold and in silver.

As noted, access to www.gotgoldreport.com presently is free.  Plans are afoot for Gene’s work to be a subscription service.  Now, though, it is free.  Gold and silver investors who closely follow the markets may want to visit the site and sign up for the COT Flashes.  However, after the site becomes a paid subscription, the COT Flashes will be part of the paid subscription.

One of the coins sold at auction in Vienna June 25 for value of its gold content, right at $4 million.  The auction house received only one bid for the coin, the bid coming from a Spanish precious metals trading firm.

The obverse of the coin bears the image of Queen Elizabeth II, who, reportedly, owns one of the other four 100-kilogram coins.  The other three coins are owned by private investors.

The coin was sent to auction when its original owner was forced into bankruptcy.  Previously, the coin has been on loan to Vienna’s Kunsthistorisches Museum where it had been on display as part of its coin collection.

The Royal Canadian Mint launched the 1-oz .99999 fine coins in 2007 primarily to exhibit the RCM’s engineering excellence in coin minting.  Producing .99999 is a difficult task that indeed requires engineering excellence.

The limited edition coins were minted only in 2007, 2008 and 2009, and they are available only when sold back into the secondary market, which is not often because less than 30,000 coins were produced each year.  The RCM has not disclosed the exact mintages.   Generally, the coins trade at a little higher price than standard .9999 1-oz Gold Maple Leafs.

Because the WGC gathered the information from a footnote in the latest SAMA quarterly report that read “Gold data have been modified from the first quarter 2008 as a result of the adjustment of the SAMA’s gold accounts,” there is speculation that the central bank had previously owned the additional 179.9 tons but not reported them as official holdings.

Regardless of where the gold came from, Saudi Arabia, which is the world’s fourth-largest holder of foreign exchange reserves, is now the 16^th largest gold holder.  This put Saudi Arabia ahead of such countries as Great Britain and Spain.  Still, the Saudi gold holdings make up only 2.8% of the country’s total reserves. The WGC’s Saudi revelation came only a year after China revealed that it was holding 1,000 tons of gold, more than double what it had previously reported for years.

In decades past, any news about central banks was about selling.  So damaging was central bank selling and speculation about still more central bank selling that in 1999 fifteen European central banks agreed to what is now called the Central Bank Gold Agreement, which limits selling by those banks.  The goal of the agreement was to provide for a more stable gold market so as not to damage the third world nations that relied on gold exports for foreign exchange.  Now, some analysts are saying that this year, for the first time in nearly two decades, central banks may be net buyers of gold.

Earlier this year, the Indian central bank bought 200 tons from the IMF.  (Although reported last year, the sale took place officially this year.  Additionally, had India not stepped forward, that 200 tones would have been sold under the Central Bank Gold Agreement.)  Further, Russia, China and other countries are adding to their reserves on a regular basis by purchasing from domestic producers.

While the world is not yet set to go back on a gold standard, it appears that monetary authorities are again recognizing the value of gold.  Undoubtedly, central banks adding to their gold holdings has played a major role in the price of gold reaching record highs.  Continued central bank buying can only add to upward pressure on the price.

Additionally, The Silver Institute publishes on its site a free quarterly publication aptly titled Silver News.  To receive an email when the latest Silver News has been posted, sign up here.  You will also receive notifications of Silver Institute press releases, which should be of interest to all silver investors.  Between notifications of Silver News publications and press releases, you may receive ten emails a year.

Nanosilver particles

The First Quarter 2010 Silver News has a fascinating article about nanosilver particles possibly being used to overcome blood platelet disorders.  When the human body sustains a wound, blood platelets clot to help heal the injury.  That, obviously, is good.  However, when clotting is triggered not to close an open wound but by a disorder, that’s bad.

Millions of people take anti-coagulants to keep their blood flowing through their arteries.  According to the article, tests show that nanosilver particles significantly inhibit clumping or coagulation in hyperactive platelets obtained from patients having diseases that generate hyperactive platelets.  Test also showed that nanosilver also significantly reduces adhesion of platelets to vessel walls and subsequent clogging of the vascular system.

If further testing and trials prove nanosilver particles to be viable alternatives to blood thinners, this could be huge, not only for people suffering from blood disorders but also for the silver market.   But, even if tests and trials support the use of nanosilver in this area, governmental approval could be a while coming.  Not only would FDA approval be needed, but the EPA also claims jurisdiction when it comes to nanosilver.  The second article in the 2010 Silver News discusses the EPA’s position on nanosilver.

Miniaturized devices

Today’s technological advances absolutely boggle the mind, and many involve silver.  For example, the same research team that 20 years ago developed long-lasting batteries for pacemakers is studying the use of silver particles to improve lithium/silver vanadium oxide batteries that are used in current pacemakers.  The batteries are 15,000 times more conductive upon initial use and could be used in other biomedical devices to treat stroke, migraines or Alzheimer’s disease.

According to Ester Takeuchi, Ph.D., developer of the lithium/silver vanadium oxide battery and holder of more than 140 patents, “We may be heading toward a time when we can make batteries so tiny that they – and the devices they power – can simply be injected into the body.”

Silver in cell phone cases

Also according to Silver News, Seal Shield, developer of dishwasher-safe computer keyboards, mice and TV remote controls, has introduced a cell phone with antimicrobial silver embedded in the case.  An antibacterial case for cell phones is certainly needed if researchers at the University of Arizona are correct.  They say cell phones carry 25,000 germs per square inch, or 500 times more bacteria than the average toilet.   Just to make their cell phones still more sanitary for users, Seal Shield’s new phone is dishwasher safe.

Read also about combat gloves that are growing in popularity with soldiers in Afghanistan.  The gloves not only functions as gloves should in keeping hands warm and dry, but the gloves are odor free because of silver-induced antimicrobial properties.  Gloves that are worn for hours at a time gather bacteria that emit foul odors.  Silver’s antibacterial properties solve that problem.

Finally, as if the above described technology is not enough, scientists in Germany and Switzerland are working on inserting silver ions into artificial DNA molecules.  The result, hopefully, will be original size DNA structure with a rigid frame that can be used without risk of structural failure in sub-miniaturized electronic devices.

Further, Dr. Faber asserted that the Greenspan-induced artificially low interest rates were the primary cause of the dotcom bubble and the catastrophic housing bubble.  This position is consistent with the Austrian economic theory of boom-bust cycles.   Consequently, if the world’s nations continue to print, the current Great Recession may turn into another Great Depression.  After the corrective part of the boom-bust cycle sets in (the malinvestment liquidation period, the bust), continued government interference in the marketplace causes the recession to be longer in duration and even great in depth than would have been if the government had done nothing.

Lewrockwell.com labeled Dr. Faber’s talk The Coming Economic Catastrophe.  He is a link to a video of Dr. Faber’s one hour talk, compliments of lewrockwell.com.  Do not pass up watching Dr. Faber’s presentation.  It kept 350 attendees glued to their seats.

My perception, coming away from the seminar:  The car has gone over the cliff.  The best we can hope for is something to break its fall.

A big however is that the wholesalers could change their pricing if the Mint releases small quantities.  The Mint has not allocated coins so there is still the possibility that there could be a short mintage.  I think a short mintage is an outside possibility.

The Mint received huge criticism in 2008 and 2009 for not being able to meet demand.  I felt that the criticism was unjustified.  The financial crisis of 2008 came out of nowhere (at least to the Establishment), and the Mint didn’t see it coming any more than Wall Street, the banking industry and certainly the government.  (Although you have to admit that John Paulson had his hand on the pulse of the financial markets.)

Therefore, I believe that the Mint will have a huge supply of fractional-ounce Gold Eagles on hand when they are released.

This belated release of fractional-ounce Gold Eagles should not be construed as flaw on the part of the Mint but a sign of the tremendous success of the its bullion coins programs.  In my opinion, the Mint appropriately dedicated its production to the more popular 1-oz coins: the 1-oz Gold Eagles, the 1-oz Silver Eagles and the 1-oz Gold Buffalos.

Had the Mint considered only “profitability,” it would have been producing the fractional-ounces Gold Eagles all along because the Mint has a bigger margin in the small coins.  However, the mint chose to produce the lower-margin coins (1-oz Gold Eagles, primarily) in efforts to satisfy demand.