Shorn and Shaven

Well, boys and girls, have you seen the price of oil these days?  Less than a hundred bucks a barrel.  Yesterday it was over $110.00.  Gold dropped from an overnight high of $1577/oz. last Friday night to around $1475/oz. today.  And silver?  My coin dealer is banging his head against his desk right now.  Last Monday he spent two hours weighing sterling flatware, vases and other assorted items from a couple of little old ladies and then paid them 80% of the spot price of $43.80, or $35.04 per ounce.

 It's a good thing for him they came in on Monday, and not the Friday before.  The price then was over $49 per ounce, and the little old ladies left a bunch of it on his counter.  How do I know about this?  I walked into his shop the day after they left and he started complaining to me about things getting out of hand like they did in '82 when the Hunt brothers tried to corner the market.  (Yeah, I'm banging my head too.  I bought the dip before it DIPPED.)  I'm of the opinion the only thing today's action has in common with that period is the fall in price.  There's lots more going on this time around, small things like the collapse of our currency, and other countries trying to revalue their currencies more advantageously, but we shall see.

"Everybody who has been given a piece of silver sometime in their life is digging it out of the closet, cabinet or box and bringing it down here for me to buy."  He said.  "Now, I've got to box all this stuff up every day and ship it to the big boys so it can be melted and purified.  I just hope the price holds long enough for them to get it and pay me.  It's dropping like a rock."

His fear was justified.  As I write this, silver is worth  $34.66/oz.  I hope he overnighted that shipment, otherwise he's lost fifty cents per ounce plus the cost of shipping.  I hate to see a little guy lose money in the course of his business.  Especially when that loss is caused by a war between the VERY rich and the merely wealthy.  The leaders of our country would classify him "collateral damage" and express sorrow to his wife over his loss, but, they also would say to her, "Such is war."  The VERY rich and the merely wealthy wouldn't even bother to do that.  They're too busy picking out new yachts.

We, in this household, are kinda fortunate these days. We can sit around eating popcorn and watch as the richest 400 families rob the rest of the top 5% in the country.  You see, those families actually OWN the metal, and their lawyers long ago created pieces of paper, which represent future pieces of silver, that are traded back and forth among many of the other members of the top 5% in lieu of the metal.  These pieces of paper are for the most part highly leveraged options to buy or sell the metal, and every now and again the big boys create conditions whereby the owners of the paper lose their shirts. 

I'm betting that before it's all over, some important folks are gonna get burned by this mess.  They're doing OK for now, and they just may sneak out of an untenable position.  But, for the rest of us it just may be the final straw, the one that destroys this country's financial hold over the rest of the world.  For now, though, it's the best circus in town. 

Believe me, I'm no guru in these matters - if I were, I'd be part of the 5% now taking a haircut. The information on how this stuff works is easy to find, and if you're at all interested, go for it.  Otherwise, just know the movie started last Friday night, sit back and enjoy.  All of them have been robbing us, and it's fun to watch the wannabes get shorn.  Too bad they are not also being shaven as closely as we have been.

If you happen to hold an ounce or two of the actual metal, I wouldn't be very concerned about this war.  The guys getting killed are leveraged, not secure in their ownership.  They own pieces of paper, which soon may be useful for not much more than heating them in the winter, not metal.  The whole thing may blow up overnight one of these days and gold and silver may lose 90% of their current price, but if that happens, everything else will have blown up as well.  Their value will remain. 

Relative PM prices will come back - too much money is being printed for them not to.  In my estimation, the printing will continue in spite of all the jawboning about the end of QE2.   Our government owes too much money and they can't quit printing.  The rise in interest rates that will occur if they do stop the presses will bankrupt our government.  (Is it possible to be "more" bankrupt?)

One interesting part of all this is the price of gas.  I wonder if it'll come down to match current oil prices as quickly as it rose.  RBOB prices have fallen 31 cents a gallon since Friday.  I wonder if we'll see that change reflected at the pumps.  If it does come down some, fill up all the cars, cans, trucks, milk cartons and test tubes you happen to have laying around.  It won't last long.  As for me, I'm even gonna fill all my coffee mugs if I can figure a way to seal them.  That should last us a while.

BY THE WAY:  This post is in no way financial advise.  It was written by an idiot who has lost thousands of dollars over the course of a lifetime in the markets.  These days the markets are nothing more than a source of amusement for me, and I wrote about it at this time because of a visit with my coin dealer and because today was an especially amusing one.  I have no money invested in any market, and encourage anyone at all to shoot me in the head if I ever put even one of  my dollars in them.  I now invest in places where the rules are not written by and for the benefit of the 1%.  Small, weekly purchases of lottery tickets qualifies as an investment, doesn't it?  I'm pretty sure everyone becomes rich rather quickly that way, don't they?