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home | RTR Letters | Caveat Emptor: Fake Silver and Gold . . .
 

Caveat Emptor: Fake Silver and Gold May Destroy Markets
Bix Weir
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CAVEAT EMPTOR: Latin for "Let the buyer beware".

I wish I could tell you that I learned this phrase from my Harvard days studying for my PhD in Latin or my Oxford days researching the early beginnings of ancient commerce but, sadly, it was from an original episode of "The Brady Bunch" where Greg Brady bought a new car that turned out to be a lemon. "Caveat Emptor" his father declared was the lesson to be learned and I took it to heart from that point on.

The very WORST thing I can imagine after 10 years studying the gold and silver markets is getting the thesis right but the investment vehicle wrong. That is where the Road to Roota Theory differs from almost EVERY other gold and silver analyst...IT'S ALL ABOUT THE END GAME!

You will hear people say the following:

1) Invest in mining stocks to get leverage to the price of the metal.

2) Although GLD and SLV are likely frauds, the little ETFs and metal storage companies have honest management and are a good place to store your metal.

3) Buy cheaper junk silver rounds and bars to get more silver for your money.

4) At least my 401k silver and gold is safe.

5) My safe deposit box is the safest place to store my metal.

At one time I thought ALL OF THE ABOVE were true statements but after digging deeper and deeper into the shadowy world of market manipulation, monetary policy, natural resource reserves and the future of money I have come to the conclusion that NONE OF THE ABOVE will survive the coming chaos and here's why:

1) Mining Stocks - It's not that they aren't valuable...but that they are MUCH TOO VALUABLE! When the monetary crash hits ALL mines will be nationalized in order to restart the system for the good of the people of that country. You didn't think that there would be a handful of gold/silver investors who would become ULTRA RICH in the transition did you? Not a chance.

2) Other Metal Storage Companies - Yes, I believe the likes of James Turk and Eric Sprott are running very honest and very upstanding businesses BUT they are also underestimating the significance of a global monetary crash. These entities will have CONCENTRATED PHYSICAL GOLD AND SILVER WAREHOUSES and "We the People" will DEMAND an equal redistribution of this wealth. Gold and Silver may even be BLAMED for the crash which will ignite "angry hoards" looking for their pound of flesh (or metal)!

3) Junk Silver - I must admit that in my early days of buying silver I was all about getting as much silver for my dollar as possible. If I could save a few dimes per ounce by buying silver rounds instead of silver coins I was all for it. But that was when silver was trading at $5/oz and there was very little incentive to fake silver bars and coins. Now, at over $30/oz, the silver world is CHANGING and there are both REASONS to fake bars and coins as well as "suspicious goings on" at various large warehouses of silver. Ask yourself a question...if silver were $7,000/oz would you test the silver bars and coins you purchase? You bet you would. My advise now is to stick to Silver American Eagles and pre1965 coins as they will be easier to sell at $7,000 silver (not that you would sell!)

4) 401k Gold and Silver - Although I never went down the path of investing in silver in my 401k or any other type of retirement accounts (I took an early withdrawal and swallowed the penalties to buy physical) I think those who have are forgetting about ALL the intermediaries between them and their metal. A global fiat monetary collapse will bring down ALL financial institutions including your brokerage house, banks, trustees, mutual funds...and especially the Depository Trust & Clearing Corporation (DTCC) which owns and controls all the stock certificates. Many people, including myself, believe the DTCC is a gigantic leveraged ponzi scheme that helps facilitate massive share leverage through Failure To Delivers (FTD's) and phony ownership transfers. Imagine if there were thousands of phony shares for every real one...who would retain ownership if EVERYONE has a legitimate claim?! You didn't think those High Frequency Traders actually worried about transferring title to all those shares they trade every millisecond did you?!

5) Safe Deposit Boxes - Doesn't it seem a little counter intuitive to invest in physical gold and silver to protect yourself from the global banking system and then turn around and stick that protection in the care of a bank?! There are many, many examples of banks confiscating the contents of safe deposit boxes and that's even BEFORE the fiat monetary system has crashed! Nope, there is NOTHING "SAFE" about a Safe Deposit Box. Don't let THIS happen to you!


  

One thing is for sure...the shortage of silver is staring to bite HARD and the Bad Guys are very vulnerable to a price explosion. There's reports from all over the world that people are scrambling to buy physical so if you can find some SNATCH IT UP QUICK!

Now take a look at this graph:


  

Based on the above graph of Silver Lease Rates it looks like there is not only a high demand to lease silver but it looks like a phase shift to a more permanent high demand structure for Silver Leasing. What you need to understand about metal leasing is that for every leased ounce there are AT LEAST 2 PARTIES THAT CLAIM PHYSICAL OWNERSHIP...the Lessor and the Purchaser of the leased silver. High lease rates could also be COMEX hedging strategies because of the Backwardization issues but one thing that it does prove....PEOPLE WANT ANY FORM OF PHYSICAL SILVER ASAP!

You might ask yourself where this metal is coming from and where is it going? Is this silver coming in and out of the the Silver ETF's? If it's put in the iShares ETF then 3 parties claim ownership...the Lessor, the Authorized Participant and the share holder of SLV. There is no way of knowing but WHO in their right mind would be LEASING silver in this volatile market UNLESS they are part of the Bad Guys trying to continue the manipulation to the very last second.

As far as deciphering the COMEX, GLD and SLV data - I gave up years ago. It's like trying to find meaning in a "virtual" paper shell game. All the COMEX warehouse data is "massaged" by the owners of the warehouses (banking cabal members) and the trading data released by the CME and Stock Exchanges is fictional...at best.

The GLD is a complete joke with reports of tungsten bars, swapped bars, leased bars, fictional bars and cooking the inventory books daily. Same with SLV. Obviously, Black Rock is in on the scam as they did not remove JPM as the custodian of SLV when they bought iShares Silver off Barclays. Given that JPM is in the midst of silver related lawsuits, FBI investigations, COMEX investigations and whisleblower controversies JPM is the very WORST company to entrust silver inventories with. The liability that Black Rock faces for not living up to their fiduciary responsibility in safeguarding the SLV physical silver is incalculable. That's how important the SLV shell game is to controlling the price of silver.

GLD and SLV are also the perfect resting places for tungsten gold bars and molybdenum silver bars because they never have to be melted down for any other use. The metal "Custodians" are very careful about which bars they release when an Authorized Participant requests a withdrawal and the Authorized Participants are all part of the scam so they will not request a withdrawal unless some clean metal has been sourced.

A BIG WARNING: Pretty soon the QUALITY and PURITY of ALL forms of gold and silver will be called into question and this will turn the markets upside down overnight. Everyone will be afraid of what they hold and will scramble to have their metal tested or sold. Those who have tainted gold and silver will try to throw it back into the market for any price and those who have the real stuff will hold on tighter than ever before.

Here are some recent articles and videos about the quickly deteriorating confidence in physical gold and silver.

Tungsten Outperforms Gold, Returns 70% In Last Year http://www.zerohedge.com/article/tungsten-outperforms-gold-returns-70-last-year

Sherie Questioning All http://sherriequestioningall.blogspot.com/2011/02/tungsten-up-70-in-value-david-morgan.html

Magnet Test on a Real and Fake 100oz Silver Bar http://www.youtube.com/watch?v=NgSXg-WOEVY&NR=1

Silver Fake or Real? http://www.youtube.com/watch?v=e6mqbQtr9DM

All this sounds easily detectable but here we have Jason Hommel testing the "ring theory" on a 100oz silver bar and the bar that was the suspected fake turned out to be real!

Silver Ring Test at the JH Mint http://www.youtube.com/watch?v=sl9xWtphiK8

If this isn't disturbing enough for you how about trying to detect fake coins that pass the ping test but not the weight test and visa-versa...

Counterfeit Coin Detection http://www.youtube.com/watch?v=wnMZiUqi9ss&NR=1&feature=fvwp

All this makes owning physical gold and silver very complicated and very risky. Many people think that there is not much counterfeiting in silver because it trades for such a low price...DON'T BELIEVE THEM! Did you ever think that all the fake silver out there may CAUSE THE LOW PRICES?!

Here's what I see happening when gold and silver finally get released from the bonds of manipulation. For a brief period of time I see two markets developing almost overnight. One that deals in "unverified" metal (which crashes) and one that deals in "verified" metal (that skyrockets). The big problem is who can you trust...

The frightening answer is NOBODY!

I'm going to reiterate what I have said many times...stick with 1 oz Silver American Eagles to be safe. They should all look, feel and sound the same. If you are nervous about your metal go get it assayed and certified...or even exchange it for US Silver Eagles or pre-1965 coins. Now is not the time to save a few pennies because you bought junk silver or random rounds and bars. EVERYTHING will be called into question very soon.

Stay safe and...

May the Road you choose be the Right Road!

Bix Weir *FREE UPDATES at www.RoadtoRoota.com




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