Tuesday, March 20, 2012

Will the Cartel Soon Set its Sights on China & India's Silver?

Historically, any individual investor who has accumulated over 100 million ounces of silver has been forced to liquidate their silver position by the cartel (see Hunt Brothers and Warren Buffett). With India and China accumulating nearly 1/4 BILLION ounces annually in 2011, and on pace to repeat this in 2012, how long can the cartel afford to let such silver accumulation continue?


It is pretty clear the financial wars are engaged. We are at war with Iran and by proxy, with China, India, Japan and Russia to name a few who have vital interests in Iranian oil and sovereignty. Jim Sinclair notes that just because someone occupies a desk in DC does not make them aware of the extent of their actions and the repercussions of those actions. Attacking Iran financially is tantamount to lobbing bombs. With bombs the damage is confined to a small geographical area. By excluding Iran from SWIFT, we've set off a 10 megaton H Bomb in the world's capital center.
I woke up this AM with some numbers running through my head that may or may not have much to do with Iran but I can't help but think they are related. The transfers of thousands of tons of gold from West to East must seem like bank robbery to some, particularly the Fed, which is acutely aware of the wealth transfer. China is divesting itself of USTs as is Russia. Russian holdings are half of what they were a couple of years ago.
Japan has some real problems with trade and budget deficits so their UST holdings will be shaken up.
We are trying to force India, a weak hand in the world of FIAT and PM, to do our bidding and stop buying oil from Iran. We can't force China to stop buying Iranian oil and we are not ready to lower the boom on Japan just yet since they, as an ally of ours, are too strategically important--for now.

But what really struck my interest was a particular number that seems to keep cropping up. That number is the total holdings of silver by one person or institution AND what happens when those holdings hit a certain number. It may or may not be related to war, actual or financial, but it does seem to have parallels given the reaction by banks and governments when a certain level of silver holdings hits the radar.

When the Hunt Brothers leveraged ownership of silver went well above 100 MOZ, their world crashed down around them, forcing them into bankruptcy. This attempt to corner the market aroused some powerful interests, going all the way to the White House.
Silver was sent to the dog house for 20 years until Warren Buffett recognized the value of this metal and quickly acquired 129 MOZ. He foresaw shortages in silver as well as its usefulness. The price of silver at just over $5 an ounce was just too tempting.
JPM helped him acquire this stack. They were later prosecuted for this on the chance they were trying to manipulate the market. Warren saw value and bought as much as he could but, according to rumor, was forced to sell his holdings in order to be bailed out of AIG. The stack was reportedly used to fund the first US silver EFT SLV.

The SLV now holds 350 MOZ and is a target of speculation that their vaults have been stripped of silver. Those shorting the stock seem to smell blood in the water.
SLV has become another major silver holder in the gun sights of powerful interests.
Much has been written about Eric Sprott and PSLV but his silver holdings may not yet be to the magic number of 100 MOZ . But if you count CEF's silver holdings, these two ETFs are now above 100 MOZ so we will see what happens there. I imagine some people may not sleep well at night with that knowledge.

And then there is COMEX with its 133 MOZ. Nothing to see there, move along. COMEX sits at ground zero in the Silver Wars. It's just a matter of time until the COMEX holdings are taken. How that will happen; calls for delivery comes to mind, it will happen possibly for no other reason than the corruption in this system.
All of these institutions and individuals shared one thing. They all held or currently at least 100 MOZ of silver. It seems to me to be a magic number where the baleful gaze of powerful interests take notice. Which leads me to the next thought.
China and India each acquired about 110 MOZ of silver in 2011 and are on pace to acquire a similar amount in 2012. Given the strategic value of silver and China's attempt to corner the world's supply of rare earths, silver being one of them due to lack of supply, these numbers must be arousing interest world wide. The total annual world production of silver is somewhere around 1000 MOZ. 25% of the world's supply of silver is being absorbed into the hands of individual buyers as well as central banks and industrial facilities in China and India. This will not go unnoticed but unlike the ease with which individuals' silver stacks are taken, it will be several orders of magnitude more difficult to take silver from sovereigns.
If the purchases of gold by China at 770 tons and India at 900 tons plus this year like bank robbery in the eyes of the western powers, I wonder how the acquisition of 25% of the world's supply of silver will be viewed by our central bank. Double parking? Jay walking? I think not. If for no other reason that silver, more than gold, arouses passions well beyond its monetary value, someone will be held accountable as silver disappears into the Eastern vortex.
While this seems to be a small part of the story, I expect that it will become much larger as the silver shortage I predicted a couple of weeks ago becomes more noticeable. It's no accident that Eastern countries are quietly creating a strangle hold on this most vital of precious metals.
As the sanctions being proposed to punish India for buying Iranian oil with gold become more commonplace, and as our central government foolishly targets more and more groups with misguided sanctions, this silver story might be seen as a pivotal battle in the coming financial and physical wars.