The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world’s largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.

This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.

Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?

And here’s where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.

As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool’s gold and fool’s silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool’s gold and fool’s silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.

Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.

Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.

After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global’s legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options. Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.

Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward. In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel. We’ve seen repeatedly, this past year in the US S&P 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices.

There was also further circumstantial evidence that bankers used the MF Global collapse to collapse gold and silver futures markets at the end of 2011. For example, in an article posted on the SilverDoctors blog by Jim Willie in which he gathered data regarding the amount of physical gold and silver ounces represented by the longs at MF Global that were standing for delivery in the futures markets before these contracts imploded, he stated: “JP Morgan increased the amount of registered silver and gold by precisely the amount that was suppose to be delivered [by MF Global]…JP Morgan effectively averted both a Comex default and a European Sovereign Debt implosion.”

Silver Lining in the MF Global Debacle?

Can there be a silver lining in the MF Global debacle? I believe that in the long-term, this extremely unethical, negative event could transform into a positive game-changer in the way people buy large amounts of gold and silver. Obviously, the futures market is not a safe market for anyone seeking to take delivery of millions of dollars of physical gold and silver as many MF Global clients learned. The GLD and SLV ETFs, of course, are no safer than any gold or silver futures contract for the same reasons. So in the future, and I mean the immediate future starting now, I believe that large buyers of physical gold and silver will now opt to bypass the bullion bank’s middle men in the futures market and go directly to the gold and silver mining companies to buy large quantities of bullion. This should eventually help usher in the death of futures markets as a mechanism for buying physical gold and physical silver and be a step towards establishing a free market for gold and silver prices for the first time in our lives. Mark Cutifani, CEO of AngloGold Ashanti, recently echoed the same: “Major [asset management fund] buyers are finding it is hard to get physical gold. People are coming directly to us [for large gold purchases,] people who want tonnes of physical gold, people with serious financial muscle, because they are finding it is very difficult to secure the volume of gold they want. That is something we have noticed over the last 18 months, and it has been increasing in the last six months. People are finding it’s hard to get physical gold.”

People that want to own physical gold and physical silver never should have been buying the GLD, SLV, or gold and silver futures. Now, in light of the MF Global debacle, scores of people will stay away from these fraudulent vehicles for good.

About the author: JS Kim is the Chief Investment Strategist and founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission to help re-establish the monetary freedom that bankers have stolen from us. Despite believing that gold and silver will remain highly volatile in 2012, JS believes that long-term holders of physical gold and silver will be richly rewarded as bogus paper gold and silver derivatives start collapsing and reach their intrinsic value in coming years. Follow JS on Twitter and Facebook.

Republishing rights: The above article may be reprinted as long as all text, links and the author acknowledgment remain intact and exactly as printed above.

There has been much acceptance of the theory that Central Banks and bankers perpetually manipulate gold and silver spot prices through the gold/silver futures markets due to strong circumstantial, non free-market evidence such as gold/silver futures prices being significantly higher in Asian futures markets versus Western futures markets for long stretches of time as well as out-and-out flagrant behavior such as the irrational raising of initial and maintenance margins on silver futures five times in nine working days into falling prices instead of into rising prices. For those not aware of the multitude of schemes Central Banks execute to suppress gold and silver futures prices, please refer to this article, JS Kim Uncovers Four Parallel Markets for Gold, when during the Wall Street collapse of 2008, bullion banks (controlled by Central Banks) routinely knocked the gold futures price down by $10, $20, $30 and sometimes even $40 an ounce usually right at market open of the NY COMEX at a time when gold was trading at less than $900 an ounce and such movements reflected 2%+ to 3%+ waterfall movements downward in price (comparatively speaking today, such percent movements would consist of $40 to $50 an ounce movements downward.

Since then, bullion banks have executed this scheme over and over, pulling bids at the market open of the NY COMEX to cause a waterfall decline in gold futures prices in a matter of a few minutes. Throw in for good measure that you can check all US holidays when the COMEX is closed for the past five years and you can find nary a day when gold is not higher or at least about even, simply for the reason that the NY Comex is closed and the Western banking cartel is non-operational in the gold/silver markets on these days. If this circumstantial evidence, literally the tip of the iceberg in the mountain of circumstantial evidence of banker price suppression schemes against gold and silver futures, is insufficient to convince the most stubborn of skeptics, then consider former US Federal Reserve Chairman Alan Greenspan’s statement in 1966 that:

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”

Would not statists that support the doctrine of seizing centralized control over economic planning and monetary policy, not covertly and actively suppress the price of gold, if the most famous Central Banker himself stated that they possess “an almost hysterical antagonism” towards gold? Today, nearly half a century later, banker propaganda and re-education campaigns regarding gold and silver have been so successful that Greenspan’s accusation that many defenders of the laissez-faire doctrine fail to recognize that gold and economic freedom are inseparable still stands true. I’ve read numerous essays by those that argue for less government interference in business and monetary affairs and for stronger free markets but yet vehemently deny that bankers ever interfere in gold and silvers futures markets through active price suppression schemes.

However, as I’ve written extensively about this topic for six years at my investment blog theUndergroundInvestor.com and will address this topic further in two books I will release by year’s end, I do not want to stray from the main topic of this essay: Gold and silver mining shares offer tremendous value and tremendous upside right now due to the fact that bankers have worked very diligently to suppress the price of gold and silver mining shares for the past 12 months.

I’ve always been surprised over the years by the lack of accusations from the CEOs of the mining world that one of the primary reasons, if not the primary reason, for the underperformance of their share prices in recent years are banker price suppression schemes enacted against the PM shares. I realize that many industry analysts refrain from making this accusation due to the fact that they are being afraid of labeled by their peers or superiors as “loony, conspiracy theorists” but who cares if someone at the CFTC or some top PM analyst at Goldman Sachs or Citigroup calls you a “loony”. Due to macro and micro-economic predictions that have the track record equivalency of Ben Bernanke, most of these guys have as much credibility as a talking dolphin, so to be discredited in an ad hominem attack by any of these guys should truly pose no worry. However, nearly all mainstream gold/silver analysts appear to still engage themselves in censoring the truth due to concerns of being ostracized by the mainstream financial industry. As far as I’m concerned, being ostracized by the criminal mainstream financial industry, in my opinion, should present one with the mark of credibility.

When I first started publicly speaking about the banker executed price suppression schemes against gold and silver futures prices six years ago, bankers tried to discredit and call me crazy back then, but now, six years later, such explanations for inexplicable movements downward in gold/silver futures markets when physical supply/demand fundamentals demand upward price movements are at times, even accepted by the mainstream media, or at a minimum, now reported by them instead of being ignored by them. These are huge steps forward in dispensing the red pill of truth to skeptics regarding the true reasons behind volatile price movements downward in the gold and silver markets. Furthermore, whenever I presented factual evidence of the manipulation in gold markets, most banking analysts that disagreed with me countered my arguments with simple ad hominem attacks that never once provided a solid refutation of, nor a credible argument against the evidence I presented, circumstantial and factual (in the form of Central Bank documents that specifically addressed their desire to suppress gold prices). I believe the same three stages of truth as described by German philosopher Shopenhauer, will also manifest itself in regard to PM mining shares just as they have manifested/are about to manifest with gold/silver prices: (1) First, truth is ridiculed; (2) Second, truth is violently opposed; and (3) Third, truth is accepted as self-evident. Finally, if people so widely accept now that bankers are interfering in suppressing much higher free-market prices from operating in gold and silver futures markets, is it really that much of a deductive leap to assume that they would also be interfering in suppressing free-market prices in gold and silver mining shares?

As is the case with the behavior of gold/silver futures markets, numerous illogical anomalies that manifest themselves with regularity in the gold/silver mining shares first made me suspect that bankers were routinely interfering with the prices of gold and silver mining shares. To illustrate my point, let’s look at the performance of a couple of flagship gold and silver mining shares versus the performance of some flagship retail and financial shares.

From the chart above, you can see that the mining shares either significantly outperformed or astoundingly outperformed non-mining industry companies with a similar market cap size in simple financial metrics except for share price appreciation in the last year, a category in which they astoundingly underperformed their competitors. I am not. In the case above, I have only provided a very basic example to illustrate how drastically undervalued share prices of producing gold and silver companies are right now. I fully realize that I am not comparing apples to oranges, but I merely wanted to illustrate how companies’ share prices with healthy earnings and revenues outside of the mining sector act, since bankers have targeted gold and silver mining shares as a sector for price suppression schemes. Thus, I had to look outside of the PM sector to provide examples of what should be happening with the PM mining share prices. And I only call the other company “competitors” of the mining stocks because the goal of commercial investment industry analysts is to prevent you from buying the most undervalued stocks in the entire market and to keep you invested in overvalued and overpriced stocks. After all, when gold and silver mining stocks finally get going in their next upleg, which may be very soon, investors will naturally want to also invest in physical gold and physical silver and thus dump the broad stock market index portfolios they may currently maintain. So in essence mining stocks are competitors of the retail and tech stocks though most would say they are not.

Furthermore, most would argue that substantially lower prices in the price component of PEG ratios are justified for the mining sector due to the typical volatility of mining shares, but this past year, this argument only serves to support my thesis regarding the fact that mining shares are the most undervalued sector and the most underappreciated sector in the market right now. Sectors that are viewed as volatile typically are expected to have lower share prices to compensate for the added risk of holding shares in that sector. However, this year, given that the broad stock market index of the S&P 500 has traveled an incredible 1,230+ points up and down since May 1st but has remained relatively unchanged in value, extra volatility of mining shares over components of broad stock market indexes does not justify lower share prices of the mining stocks. Furthermore, because banker attacks on gold and silver mining shares, whether achieved by indirect take downs of gold/silver futures prices and/or direct sell-offs of the shares during times of low volume trading, are responsible for the added volatility of PM shares, arguing that the volatility of the sector justifies lower PM share prices also loses credibility.

Even if we disregard this admittedly circumstantial argument, if we compare the trading ranges at which these four stocks traded at during most of the past 12 months, the volatility comparisons do not justify the huge differences in the PEG ratios of the past 12 months between the PM stocks and the stocks that trade on the broader stock market index. Chipotle traded between a range of $270 and $340, or a 25.93% spread for most of the year while Silver Wheaton traded in a range between $30 and $40 a share, or a spread of 33% most of the year, though both stocks traded both higher and lower than these ranges for short periods of time. Though this is but a comparison of two stocks out of hundreds of mining stocks and a couple thousand NYSE stocks, and though some may argue that Chipotle is overvalued at its current share price and PEG, many PM mining stocks across the board are flush with huge cash reserves, soaring revenues, double digit earnings growth for several consecutive quarters, but yet have experienced stagnant or even negative share price growth over the past 12 months. Again I am only comparing Chipotle to Silver Wheaton to highlight the massively manipulated state of flagship gold and silver mining companies over the past 12 months and not because I think a direct comparison is the most apropos one.

Besides the totally illogical performance of Barrick Gold and Silver Wheaton above when considering their PEG ratios and their massively positive earnings growth over the last year, I have witnessed numerous anomalies over the past decade that convince me beyond a shadow of doubt that bankers manipulate the prices of gold and silver mining stocks downward on a persistent and consistent basis to prevent the masses from understanding that ownership of physical gold and physical silver will liberate them from our current morally bankrupt, illegitimate and unconstitutional monetary and banking system. For example, during dozens of options expiration days over the past five years in particular, I have witnessed uptrends in the price of numerous mining stocks stall and shed 3% to 4% from the previous day’s market close on literally no negative news other than the fact that it was OpEx day. And usually the prices of mining stocks, on days when this happens, gap down significantly on market open. Then, the following Monday after OpEx day is finished, the uptrend in mining shares will resume. Yes, one can call this behavior coincidental but anyone that does so would be dismissing the laws of probabilities and calling for a new mathematical paradigm to apply only on OpEx days. The percent chance that attributes such regular and repeated price action behavior that occurs only on OpEx days to the probabilities of “random noise” would likely come in at less than a fraction of 1%.

For the first time I can recall in recent times, the CEO of a major PM mining company finally spoke out about the ridiculous and likely intervention of the banking cartel in suppressing the price of not only PM futures but PM share prices. Keith Neumeyer, the CEO of First Majestic mining, recently voiced his opinions behind the downward price volatility not only of gold/silver futures but of gold/silver mining shares: “I don’t think supply and demand has anything to do with the price [of silver], unfortunately. The world we live in today is a paper environment where silver is priced by financial circumstances. Banks, traders and investors around the world move markets to where they want them to be. Governments and commercials—big banks like HSBC and JP Morgan—all have a piece of the action. They alternately work together or sometimes against each other. All these forces price the metal. That’s one reason we’re seeing the volatility that we’re seeing today.” Dramatic silver volatility “has to do with the financial instruments that we trade in and with the fact that silver trades a billion ounces per day on the COMEX alone when there are 26 to 30 million ounces of silver available for delivery. With that kind of leverage, you just don’t have a proper market… The governments, regulators and bullion banks have let the silver market get more and more leveraged. We’ve seen a lot of wealth destruction as a result of this leverage and we’re going to see a lot more until, finally, the governments decide to change the system.” With these scathing comments about the casino like nature of banker-rigged gold and silver markets, Neumeyer hit the nail squarely on its head.

Unfortunately, governments, because they are partners with the bankers in this system of cronyism, will never voluntarily change the system. Thus, here is the billion dollar question if one understands the tremendous illicit activity of bankers in rigging gold/silver PM shares much lower than their free market prices: Why would you want to buy into these shares even if they are remarkably undervalued right now given massive banker desire to control and suppress their share prices? After all, all of this banker rigging convinced a few gold/silver technical analysts just two weeks ago to predict imminent collapses in the silver price to $20 an ounce in light of how bankers were “painting the charts” in gold and silver to keep investors fearful of these sectors. In fact, a look at the BPGDM (Gold Miners Bullish Percent Index) right now shows that bullish sentiment towards gold/silver stocks is practically non-existent though we are at a crossroads when people should be buying PM shares because of their current tremendous upside. So other than the fact that gold and silver mining shares offer great value right now, is there a reason to realistically believe that gold and silver mining shares will win their battle against banker initiated share price take downs any time soon? To answer this question, let me tell recall a couple of stories that will frame our current situation of negative sentiment about gold/silver mining shares in the proper perspective.

A couple of years ago, in April of 2009, I spoke in Asia to a group of investors at a time when bankers had knocked gold back down from the psychologically important $1,000 an ounce level for the fourth time in the about a period of 18 months. Back then, gold was trading at about $870 an ounce. The investors that attended my conference asked me back then why in the world they should buy gold at $870 if banker manipulation was one of the primary reasons responsible for the failure of gold to breach $1,000 an oz four consecutive times. Furthermore, they inquired, why couldn’t the bankers manipulate gold back down to $500 an oz if they could successfully prevent gold from breaching $1,000 on four consecutive occasions? I remember informing the investors that the banker manipulation schemes could only succeed short-term and that the bankers would fail long-term. Just as Central Banks’ endless rounds of QE will spectacularly fail long-term and only serve to kick the can of global economic failure down the road, the Central Banks’ price suppression schemes against gold and silver only kick the inevitable rises in gold and silver prices down the road as well. In addition, I informed my highly skeptical audience that the law of diminishing returns would apply to banker manipulation schemes that work against free market forces, and that each subsequent application of manipulation against free market forces would last a shorter time, as is evident in the chart above. Though there was a large gap of time between the second and third times that gold approached $1,000 an ounce after getting knocked backwards, the time in between the third and fourth time and the fourth and fifth time gold approached $1,000 an ounce was much more condensed. So those that remained skeptical and had more faith in banker amorality than in the belief they could defeat these banker manipulation schemes lost out on a 100% gain in the price of gold that has occurred between then and today.

If we look at the chart of the mining shares I presented above, the same pattern with the mining stocks that afflicted gold prices a couple of years ago is evident. The HUI Gold Bugs Amex has been turned back from the 600-610 level four consecutive times (with one false breakout in early September 2011) and each time bankers have rebuffed the index from this level, it has taken less and less time for the index to rebound to this level again as with the bankers’ attempt to defend the $1,000 an oz price level with gold. Though you may not recall, I remember many people being incredibly frustrated with the price action in gold from 2008 and 2009 and with some people selling all their gold as a result of the bankers’ intervention to control the price of gold, an action that ironically was the exact end goal of the bankers’ manipulation game. Today, despite the fact that we have history as a guide and the cliché that history always repeats itself, for some reason, I have seen many people become incredibly frustrated with the bankers’ rebuke of the attempts of gold and silver mining shares to climb higher and as I witnessed in 2009, I have seen people make the big mistake of dumping all of their gold and silver mining shares in the past couple of months due to frustration. In fact, after I scripted this article, Don’t Miss Out on One of the Best Investments of a Lifetime…Yet Again, on August 8, 2011 in which I advocated the HUI at 531.78 as a good low-risk, high-reward entry point to purchase some gold mining stocks, I received some comments that literally called me an “idiot” for writing this article after the HUI hit a low at market close of 502.92 in early October, even though this represented less than a 5.5% drop from the level I advocated buying mining stocks that past August.

As one can hardly legitimately call anyone an idiot for making a call that leads to a temporary 5% drop, I can easily guess the novice investor mistake that this irate person committed. Just as is the case today, as was the case on August 8, 2011, hardly any investors ever make a move when gold/silver assets are dirt-cheap. Instead they fall victim to the game of banker manipulation, and refuse to buy gold and silver assets when they present solid value as they fear a gold/silver crash. Consequently, they wait for significant rebounds before ever investing in gold/silver despite golden fundamentals at much lower prices that point to the strong possibility of much higher prices in the future. Even if much higher prices are followed by another round of manipulation and lower prices, interim volatility is irrelevant, as long as your decisions to enter gold/silver markets at the right time and prices are solid. I can only fathom that this person finally made the move to buy mining stocks after the HUI hit a short-term top of 635.04 one month after I advocated the buying of gold mining stocks. Thus, one month later, instead of being able to sit through a very manageable 5% drop, this investor likely panic-sold out of gold mining stocks after taking a 26% hit to his gold mining stock portfolio in little over a month. Though my call that PM stocks would be the best in class from that point forward to the end of this year has not yet come to fruition, I strongly believe that my end prediction will still prove correct, and that only the time frame of my prediction will be pushed out by several months. That is why I always provide timely guidance to my clients that distinguishes between the times we need to move into, or remain in cash, and the times we need to remain patient and fully committed. As I illustrated in my example above, timing can easily be the difference between easily waiting through a minor 5% correction or being stuck with a 26% loss after one month.

The short-term corrections of the HUI Gold Bugs index from the 600-610 level on four consecutive occasions has led to bullish sentiment being nearly non-existent for gold mining shares right now (and you could easily make the point that bullish sentiment in silver mining shares is even worse right now). Just as most investors committed the huge mistake of judging gold’s upside in 2009 as non-existent due to banker price suppression schemes, people are making the very same mistake in judging the upside of mining shares right now as non-existent. The banker price suppression scheme against gold and silver mining shares will fail, and I believe that the fifth approach of the HUI to the 600-610 level will be the time that the HUI breaks above this level for good and heads much higher.

Last time I saw an opportunity better than our current one in the mining shares, I informed my clients to double down on their positions in Silver Wheaton at $3.45 a share in November of 2008. Today with Silver Wheaton trading at $33.52 a share, those that acted during a time when sentiment regarding PM shares was at an all-time low, have been rewarded with a 872% gain in little more than three years. Though I don’t expect mining shares to gain 872% in 3 years again, no doubt there may be more than a handful that return several hundred percent in gains in the next three years.

We must not let our fear of bankers’ amorality and their desire to suppress our freedom scare us away from buying assets that will free us from their illegitimate and unconstitutional monetary system. If one remains too fearful to buy gold and silver mining shares due to banker introduced volatility into this sector, consider at a minimum, purchases of physical gold and physical silver to replace your fiat paper currencies and to replace your paper silver SLV and paper gold GLD ETFs. Also consider that the global broad stock market indexes have been no less volatile than mining shares this year with MUCH greater risk as banks have manipulated broad stock market indexes higher and mining share indexes lower. And what if I’m wrong about mining shares heading much higher from this point forward? The aforementioned Keith Neumeyer, CEO of First Majestic Silver, provides perhaps the best answer to have faith that history will repeat itself with the mining stocks share prices eventually moving higher into their free market, non downward-manipulated prices:

“If I’m wrong (about free market forces winning the battle in gold/silver markets in the future), the banks will run the world, even more so than they do today, 10 or 20 years from now. God forbid that we ever get there because that’s a one currency, one government world that would absolutely be a disaster for the human race. There would be no freedoms at all to move or to invest. It would be like having shackles on our ankles. There is a movement to go in that direction, unfortunately. There are a number of very wealthy people that want to see that. I hope that we can find the politicians to prevent that type of world from coming to pass.”

About the author: JS Kim is the Managing Director, Chief Investment Strategist & Founder of SmartKnowledgeU, a fiercely independent investment research and consulting firm that has been providing contrarian, independent investment guidance to clients in 33 different countries since 2006. Despite the struggles of PM mining shares in 2011, his Crisis Investment Opportunities newsletter, since inception in June, 2007 to the end of September 2011 has yielded a cumulative +162.40% gain versus the -36.20% loss of the ASX200 and the -25.70% loss of the S&P 500 over the same investment period. Follow us here on twitter.

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Alexander Hamilton equated essential freedoms with the preservation of the purchasing power of all money. Debase the value of money and we will lose our freedoms. So then, what does the Central Banker deliberately directed, massive debasement of all major fiat currencies in the world bode for future generations? This is precisely why we have recently witnessed the birth of uprisings all around the world – Greece, Iceland, Ireland, the United States, the United Kingdom, Spain, Portugal, Egypt, and Tunisia just to name a few. As we all know, the world’s reserve currency, the US dollar, has now lost about 97% to 98% of its value and purchasing power since private bankers created the US Federal Reserve in 1913. Say what you will about the death throes of the Euro but the US dollar is hanging by a thread right now as well.

I urge everyone to:

(1) Read the below Utah Monetary Declaration;
(2) Discuss it with your neighbors and friends;
(3) Research the parts you may not understand so that you can better understand the tyranny and complete immorality of our current monetary system; and                                                                                                                                                             (4) Learn why Alexander Hamilton believed the soundness of money to be inseparable from freedom to such an degree that he advocated not imprisonment, but death, for the deliberate act of devaluing US coins.

The freedom to choose the form of money we can use in our daily lives is inseparable from the ability to live one’s life as a free man and a free woman. Monetary freedom is inseparable from all other inalienable freedoms we possess in this life. What we have today is monetary enslavement. Many of us have lived our lives believing the lies and propaganda about our current, extremely oppressive monetary system because powerful banking families have deviously inserted these lies into the textbooks they feed into our global educational system. Other times, they just insert professors that they have paid-off to spread their propaganda directly into “esteemed” (and I use that word very lightly) institutions like Harvard University, Princeton University and the University of Chicago to pollute the minds of millions of impressionable youth. It is time we help one another wake up to the truth about the utter disgrace that we call our modern banking and monetary system. If we wish to stand in solidarity with our brothers and sisters around the world in restoring our essential freedoms, the first pro-active step every citizen in this world must take is to research and learn why the debasement of monetary value is a direct attack on the freedoms of every citizen in every district, in every province, in every state in every country in the world.

As many people already know, Utah Governor Gary Herbert signed HB317, the Utah Legal Tender Act into law earlier this year in March of 2011. Though well reported by the mainstream media as an act that made Utah the first US state to accept gold and silver coins as legal tender, this interpretation was erroneous as all federally minted gold and silver coins have always been accepted as legal tender at their face value in every state inside the United States. The Utah Legal Tender Act did not change this important Central Bank restriction on the use of gold and silver coins as money and as a competitor to their fiat currencies. In the state of Utah, a one-oz gold American Eagle coin can still only legally be used at its face value of USD$50 in monetary transactions and not at its current US bullion dealer price of about USD$1,740. There is no fool that is going to spend a coin valued at USD$1,740 to buy USD$50 of groceries, so even though the US government states that gold coins and silver coins can be used as legal tender, that declaration is the equivalent of telling someone imprisoned in solitary confinement that he is free to leave any time he wants as long as he can avoid being shot and killed by the guards if he attempts to escape. Thus, the Utah Legal Tender Act HB317 truly accomplished nothing in the fight for freedom other than to exempt all sales of gold and silver coins from the state capital gains tax.

However, there is a much more important declaration now circulating among the citizens of Utah that deserves our attention, the Utah Monetary Declaration, the full text of which I have reproduced below. This much more important declaration, if it can reach the Utah legislature and eventually be passed into law, would be infinitely more important than the Utah Legal Tender Act for it would grant Utah the power “to monetize gold and silver coin as an alternative, voluntary medium of exchange, and as an effective check and balance against debasement of the national currency by the national government which is constitutionally precluded from demonetizing state legal tender, through disparate tax treatment, discriminatory regulation, the threat of suppression and seizure, or otherwise.” One of the essential tenets of this declaration is the following: “As an essential element of true liberty and of the pursuit of happiness in a free society, all people enjoy the inherent and unalienable right to lawfully acquire, hold and use as a medium of exchange whatever form or forms of money they may prefer, including especially gold and silver coin.” This declaration is attempting to enforce the mandates of the US Constitution that the private owners of the US Central Bank, the Federal Reserve, have directly violated for nearly 100 years. The Utah Monetary Declaration also attempts to re-establish the freedoms first established by one of the first laws to regulate coinage in the United States, the US Coinage Act of 1792. The most important sections of the US Coinage Act of 1792 were Section 14 and Section 19 as reprinted below:

Section 14. And be it further enacted, that it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and free of expense to the person or persons by whom the same shall have been brought.

Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.

The Utah Monetary Declaration

WHEREAS, money, as a medium of exchange, a store of value, and a unit of measure promotes economic activity, growth and productivity by facilitating specialization and trade, the accumulation of wealth and its long-term investment, as well as accountability in setting prices, tracking progress, and settling accounts;

WHEREAS, natural money – precious metal coin – by virtue of its inherent qualities of recognizability, measurability, uniformity, divisibility, durability, portability and scarcity has reliably retained its purchasing power, notwithstanding periodic fluctuations, over the centuries and millennia of human history, serving as an effective medium of exchange and store of value often without any governmental declaration to require, legitimize or perpetuate its adoption and operation as such;

WHEREAS, sound money, by retaining stable purchasing power over time, best serves societal needs by substantially reducing the uncertainty of inflation risk for creditors and deflation risk for debtors as well as encouraging saving and investment among the general populace and benefiting the economic zone in which it circulates by stimulating the economy and by attracting foreign capital and commerce to the region;

WHEREAS, history attests that monopolistic monetary systems frequently engender currency debasement, resulting in serious consequences such as lost purchasing power, inequitable wealth redistributions, misallocation of productive resources, and chronic unemployment, and that, as the cornerstone of a free market and society, the right to choose, whether between suppliers of goods and services, political parties and candidates, or between alternative media of exchange, effectively promotes the general welfare;

WHEREAS, for the equal protection of all people, rich and poor, the open circulation of complementary and competing currencies should be fostered and promoted by every sovereign state, including those of The United States of America pursuant to their monetary powers (expressly reserved in article 1, § 10 and in the 10th amendment of the United States Constitution) to monetize gold and silver coin as an alternative, voluntary medium of exchange, and as an effective check and balance against debasement of the national currency by the national government which is constitutionally precluded from demonetizing state legal tender, through disparate tax treatment, discriminatory regulation, the threat of suppression and seizure, or otherwise;
NOW THEREFORE, we the undersigned hereby declare and affirm that:

1. As an essential element of true liberty and of the pursuit of happiness in a free society, all people enjoy the inherent and unalienable right to lawfully acquire, hold and use as a medium of exchange whatever form or forms of money they may prefer, including especially gold and silver coin.

2. All free and sovereign states bear the moral, political and legal obligation not only to refrain from debasing their own currencies (except under the most exigent circumstances) and from erecting barriers to the unfettered circulation of monies issued under the authority of their sovereign trading partners, but also to affirmatively defend and protect against fraud, counterfeiting, uttering, passing off, embezzlement, theft or neglect by requiring full transparency and accountability of all state chartered financial institutions.

3. No tax liability nor any regulatory scheme promoting one form of money over another should apply to: (a) the holding of any form of money, in a financial institution or otherwise; (b) the exchange of one form of money for any other; or (c) the actual or imputed increase in the purchasing power of one form of money as compared to another.

4. Except in the case of government assessed taxes, fees, duties, imposts, excises, dues, fines or penalties, the authority of government should never be used to compel payment of any obligation, contract or private debt in any specific form of money inconsistent with the parties’ written, verbal or implied agreement, or to frustrate the intent of contracting parties or impair contractual obligations by invalidating the application of a discount or surcharge agreed to be dependent upon the particular medium of exchange or method of payment employed.

5. The extent and composition of a person’s monetary holdings, including those on deposit with any financial institution, should not be subject to disclosure, search or seizure except upon adherence to due process safeguards such as requiring an adequate showing of probable cause to support the issuance by a court of competent jurisdiction of a lawful warrant or writ executed by legally authorized law enforcement officers.

We hereby urge business leaders, educators, members of the media, legislators, government officials as well as judicial and law enforcement officers to use their best combined efforts to reinstate and promote the legal and commercial framework necessary to establishing and maintaining well-functioning, sound monetary systems based on choice in currency. The signatories hereto concur in the general principles expressed in the foregoing declaration notwithstanding specific reservations some may have as to how such principles should be interpreted and applied in practice.

We, at SmartKnowledgeU, who will continue to fight for monetary freedom in perpetuity as one of our most important missions, would add one more caveat to The Utah Monetary Declaration and it is this:

“Immediately outlaw the use of all gold and silver paper derivatives that allow bankers to create millions of imaginary paper ounces of gold and silver that do not physically exist in the real world, and thus allow bankers to defy the basic tenets of supply and demand in manipulating the spot price of gold and silver futures. If demand for physical gold and physical silver accelerates and if supplies of physical gold and physical silver diminish, falling gold and silver prices will no longer be legally accepted in light of these supply/demand dynamics. Let the price of gold and silver be dictated only by free market forces of the supply and demand for real physical ounces of gold and silver and not set by the behavior of a single ounce of paper gold and paper silver that represents nothing more than what a piece of paper fiat currency represents – which, of course, is nothing.”

GOD BLESS & AMEN.

Republishing Rights: This is a copyrighted article that may be reprinted as long as this blog is acknowledged as the author and a DIRECT link back to this blog is contained in the reprinted article.

In 2008, I publicly predicted that US markets would crash just 18 trading days before US markets started a slide that saw it lose about 50% of its value. That year, when major developed markets ended up losing 38% to 40%, we still returned positive returns to our investment newsletter clients precisely due to our strategy of concentration and our aversion towards diversification. For six years now, I’ve said that diversification is a sell-side strategy that fattens commercial investment firm executive’s wallets at their clients’ expense even as commercial investment firms continue to sell this rubbish strategy to their clients. My claim has drawn the ire of more than a handful of commercial investment financial consultants. However, convincing clients to believe in the “intelligence” of a diversification strategy that simply has ceased working for years is what puts food on the tables of many financial consultants and keeps food off of yours. Ask yourself, when was the last five-year period that diversification strategies helped you achieve a significantly positive cumulative return? Can’t remember the last 5-year period in which this has happened, can you?

Since I launched my investment newsletter, I have concentrated my newsletter’s portfolio in hard assets and commodity-based stocks every single year. Some years, my newsletter portfolio may contain almost nothing but gold and silver based assets while in other years, I may choose to hold some agricultural and energy based stocks as well. This type of strategy is anathema to all commercial investment industry financial consultants and advisers who are trained to believe that diversification is an absolute must. Of course if you choose to concentrate a portfolio in the wrong assets, you will lose the bulk of your clients’ money every year. This is precisely why nearly all commercial investment industry consultants and wealth “advisers” choose not to concentrate. Diversification serves as a cover for the fact that the great majority of commercial investment industry employees know little more about markets than you do and are nothing but glorified salesmen and saleswomen in fancy suits and expensive cars, thanks to the large fees their clients pay them every year. Think about it. Did you really need a Private Wealth Manager to lose 35% to 40% of your portfolio’s value in 2008? I’m sure most people could have done that on their own and saved the fees associated with being a client of a “prestigious” investment firm.

When I used to work for a commercial investment firm before I walked out on the immorality of the industry, I was actually instructed to prime my clients to expect a portion of their portfolio to underperform every year. I was trained to parrot to my clients that it was impossible to know what sectors would rise and what sectors would fall in the coming year and to support my dog and pony show with charts and data that would illustrate this point in order to legitimize it. But statistics can often be manipulated to prove a point, even when that point is wrong. Of course, in reality it was impossible for me to know what sectors would rise and what sectors would fall every year. Why? Not because I couldn’t do it, but because the firm I worked for wanted me to spend all my time meeting with prospects and closing deals. Consequently, where in the world would I actually find time to analyze markets and formulate an intelligent opinion about which assets would rise and which assets would fall? When I worked for the commercial investment industry, I probably spent 95% of my time marketing and 5% of it studying markets. Since I left the industry many years ago to start my own firm, this ratio has completely reversed. Now I probably spend 5% of my time marketing and 95% of my time analyzing markets to ensure my clients stay very profitable throughout this deepening global economic and monetary crisis.

Diversification is the big fat lie that the commercial investment industry desperately needs you to believe in, even as your portfolio size continues to shrink. Even famed investment guru Jim Rogers agreed with me two years ago and publicly declared that the diversification strategy, in his words, was a “scam” designed to bilk clients of money and enrich the executives of commercial investment firms. The job of anyone that works in the investment industry should be to determine what sectors will be up every year, what sectors to avoid every year, and how to maximize our client’s profits. This is what our clients pay us to do. However, this is not the goal of the commercial investment industry. The goal of the commercial investment industry is to maximize their bottom line even if it minimizes yours. This is why my investment newsletter has outperformed all diversified major global developed stock market indexes by 20% to 45% every single year. This is why from the launch of my newsletter until August 30, 2011, my newsletter has yielded a cumulative +226.61% return to my clients while the diversified S&P 500 index has yielded a negative 20.89% loss to its clients during the exact same investment period (in a tax-deferred account).

I realize that the level of brainwashing from the commercial investment industry regarding the “intelligence” of diversification is quite strong. I still, on occasion, receive emails, from a potential customer that chooses not to buy our investment newsletter after reading a couple of sample issues, due to his or her shock regarding our concentration strategy. A typical response from someone that has been brainwashed by the commercial investment industry would be the following: “I can not justify buying a newsletter that is so risky and so heavily concentrates its portfolio. When gold and silver crash, your portfolio will be wiped out. I will continue to diversify. Thanks but no thanks.” The lie the commercial investment industry continues to spread about concentration is that it may lead to enormous gains at times, but the enormous gains are only achieved with great risk. If this were true, then the most positive years I’ve achieved (a +63.32% yield in 2009) should have been offset by enormous losses in 2008. For if one is taking great risk to achieve very significant gains then during negative years, that great risk should translate into much worse performance as well. Instead, in 2008, when all developed global stock markets lost 35% to 40% for the year, I was still able to achieve positive gains that year as well. So much for the concentration is risky lie.

For four years, I have chosen to heavily concentrate my newsletter’s portfolio in gold and silver assets among a few other very select asset classes. If one looks at the below chart of the AMEX HUI Gold Bugs Index, an index of gold mining stocks, one may wonder how in the world one could ever achieve enormous returns by investing in gold and silver mining stocks.

From June 15, 2007 until August 30, 2011, the HUI, despite all the volatility that is evident in the above chart, the HUI has still returned a positive cumulative return of +81.69%, outperforming the S&P 500 and other various major global stock market indexes by more than 102% over the same time period. Take a look at the chart of the diversified US S&P 500 over the same time period. The commercial investment industry has worked their hardest to brainwash you to believe that diversification equals safety.

Does the chart of the very diversified S&P 500 index below look any less volatile to you than the chart of the gold miners index? Furthermore, if you have to endure such volatility, would you not rather endure such volatility and be sitting on a cumulative +81.69% gain (the HUI Gold Bugs Index returns) versus a -20.89% loss (the S&P 500 returns)?

Furthermore, the commercial investment industry fails to inform you that the very firms they work for deliberately create periods of massive volatility in gold and silver to the downside at times for the very purpose of confusing investors and preventing them from concentrating in the only assets that will save their financial well-being. For example, due to my understanding of banker manipulation of gold and silver prices, I have predicted intra-day price declines and rises in gold very accurately on my twitter account even though the information I provide through my tweets is only about 1% of the information I provide to my clients on a regular basis. Because much of the downside volatility in gold and silver is artificially induced and engineered by bankers to scare investors away from this asset, the commercial investment industry fails to inform its clients that one can actually leverage this volatility, as long as it is understood properly, to further enhance gains. Just check my article here, written just a few weeks ago, where I posted the below chart and informed all my blog readers that gold and silver stocks were a great buy because they were heavily undervalued.  Since my post,  gold and silver stocks have strongly risen.

For example, had you bought any number of gold mining stocks at the point I advocated buying on the chart above, as of yesterday’s market close, Newmont Mining has risen +12.91%, Barrick Gold by +10.89%, and Royal Gold by +20.77% in just the past several weeks just to name a few of the gold stocks that really took off higher in price. And had you entered gold mining stocks at the point I advocated just a few weeks ago, you would now be able to weather any subsequent correction in price in the mining stocks, should it develop over the next week, with little worry.

Artificial banker manufactured downsides in gold and silver assets always provide an opportunity to buy assets on the cheap at various points throughout the year. By using the volatility as an opportunity rather than being fearful of it, I was able to produce a +226.61% cumulative return to my clients during the same four-year period that the HUI Gold Bugs index returned a +81.69% return. So please don’t continue to be fooled by the commercial investment industry propaganda about gold and silver. Ensuring that you correctly view its volatility as an opportunity to enhance gains instead of viewing its volatility as a negative, and ensuring that you transform your belief about gold and silver from an erroneous belief that they are risky assets into a correct belief that they serve to protect your wealth may very well save your financial life in the next few years.

About the author: JS Kim is the Founder, Managing Director & Chief Investment Strategist of SmartKnowledgeU, a fiercely independent investment research and consulting firm that seeks to expose the many fraudulent concepts of Wall Street, uncover the best ways to invest in gold and silver, and protect and grow the wealth of our clients.

Republishing rights: The above article may be reprinted, as long as all text and all links remain intact as exactly above.

(1) On September 9, 2006, I emphatically stated, “We are on the brink of a major global economic crisis” at the very same time economic pundits were calling for a new period of great economic boom and record low unemployment in the near future. Did this happen? CHECK!

(2) At the beginning of September, 2007, when gold was still trading at about $680 an ounce, JS stated that gold would reach $850 by the end of the year. What happened? Gold hit $850 an ounce on January 3, 2008. CHECK!

(3) On my company website, in a statement I posted in January, 2011, I said, “If you don’t understand how we can still be in a crisis when stock markets have risen around the world in 2010 and into 2011, [we still are].” What happened? The Dow Jones Industrial Average just plunged 2,074 points (-16.2%) in the last 15 trading days and the Hang Seng plummeted 3,311 points (-14.5%) in the last 9 trading days. CHECK!

(4) In the meantime, I’ve been saying for YEARS that not to own gold and silver is insanity and that gold and silver assets will save your financial life. From launching my Crisis Investment Opportunities (CIO) letter in mid-June 2007 until July 25, 2011, the US S&P 500 has returned -21.39%, the UK FTSE 100, -11.99% and the ASX200, -26.51%. My CIO newsletter? +211.49%. CHECK!

(5) On August 8, on the day US markets were crashing, I posted an article on my blog with a chart showing the HUI Gold Bugs index at 531.78, saying NOT TO SELL along with crashing global market indexes, but that this current time would present “the LAST big buying opportunity of the year before the Gold/Silver stocks rise much higher by the end of 2011”. What happened since then? US and global markets continued to crash, but gold/silver stocks in turn headed much higher, with MANY gold and silver stocks rising by 8%, 9%, 10% and MORE in just the past two days. CHECK!

Is it too late to get on board the best performing asset class of the last decade, gold and silver? Absolutely not. But time is running out. To learn more about how you can benefit along with SmartKnowledgeU paying members in more than 33 countries worldwide, please visit our website at http://www.smartknowledgeu.com and download and read our fact sheets.

With everyone mesmerized in the past week with the issue of whether or not the credit rating agencies would downgrade the US’s rating, I tweeted the following this past July 29th:

“think that a deal to raise debt ceiling will be announced before deadline. but in the end, whether it happens or not is really irrelevant.”

“for debt ceiling to be raised or not is like choosing b/w being on a sinking rubber raft or the sinking Titanic. both outcomes will be same”

“only timeline for crisis will change because no problems will have been solved whether debt ceiling is raised or not. that is the key point.”

Frankly, I really didn’t care whether the US credit rating was downgraded because in my mind, it should’ve been downgraded at least 5 years ago and I knew that any subsequent downgrade, if it happened, would not reflect the true state of the disaster that is the banker/US government kleptocracy. I knew that the fundamentals supporting gold and silver would not be changed by the outcome of this credit rating downgrade and that gold, regardless if the bankers and the CME colluded in the future to knock down prices by raising margins and forcing longs to liquidate, as they did with silver recently, would still recover strongly in the future no matter how far they were able to take prices down in their bogus-run futures markets in London and New York.

Commercial investment advisers consistently dole out some of the worst financial advice I have ever encountered. Why? I believe sometimes advisers at huge firms want to do what’s best for their clients but this often conflicts with their corporate directive, which is to feed the corporation’s bottom line. So even now, though there is a very high probability in my opinion, that the GLD and SLV ETF are fraudulent funds, commercial investment advisers continue to shuttle their clients that want exposure to gold and silver into these vehicles (read here for more on this).

Secondly, financial advisers can almost never contradict the top investment strategists of their company. For example, Robin Bew, chief economist at HSBC Bank, predicts gold will fall to $1390 by year-end and to $1000 by 2013. If the Chief Economist at your firm is predicting a substantial drop in gold prices, then as an adviser at this firm, you can’t very well advise your clients to buy mining stocks on the falling gold prediction of your Chief Economist, even if you believe they will go on a monumental run in the second half of this year.

One thing I truly believe, however, as you can see in the below graph (note: the below graph is from the end of last week), is that this current correction in gold and silver mining stocks have made them supremely cheap again and that the best-in-class mining stocks, when this correction ends, will offer some of the best returns of any asset class for the remainder of 2011 given the obvious and deliberate devaluation Central Bankers are inflicting upon the US dollar and the Euro.

Again, one has to remember that concentration does not equal risk though the commercial investment industry really wants all their clients to believe this rubbish concept. Secondly, corrections in gold and silver, though they are very frequently sold by the commercial investment industry as the “bursting of the precious metals bubble”, are just that – corrections, and additionally buying opportunities to accumulate more physical, when they happen. If one truly understands the fraudulent nature of today’s fractional reserve banking system, one would realize that concentrated strategies are the ONLY strategies that have led to wealth preservation, wealth growth and risk reduction in the past few years. Not owning a single ounce of physical gold and physical silver in this environment is absolute insanity (and remember if you own the GLD and the SLV, you DO NOT own a single ounce of physical gold or physical silver). Recall last week’s conversation below to know that politicians and bankers will lie to you much more frequently than they will ever tell you the truth.

Fox Business Reporter Peter Barnes: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
US Treasury Secretary Timothy Geithner: “No risk of that.”
Barnes: “No risk?”
Geithner: “No risk.”

After all, former US Federal Vice Chairman and current Princeton University economics professor Alan Blinder, in perhaps what was one of the most misanthropic statements of all time, condescendingly stated, “The LAST DUTY of a Central Banker is to tell the public the truth.” (emphasis mine). At SmartKnowledgeU, we have seen this disaster coming since 2006 and have literally been urging our clients for six years now to buy physical gold and physical silver. For those that have concentrated their investments in gold and silver the last 6 years, the rewards have been tremendous, even through the disaster of 2008. Still, it certainly is not too late to benefit from gold and silver investments right now though the Commercial Investment and Banking industry may be trying to convince you otherwise.

At SmartKnowledgeU, we believe that this current correction in mining stocks will offer the last great buying opportunity of the year and that any future correction in gold and silver that may happen before the end of the summer (if it even happens) will also offer the last buying opportunity of the year. And whether QE3 happens or not, this is irrelevant to investing in gold and silver assets. It is our firm belief, QE3 or not, that gold and silver will provide far superior returns to any global stock market for the remainder of this year and in future years as well.

About the author: JS Kim is the Chief Investment Strategist of SmartKnowledgeU, a fiercely independent investment research and consulting firm that tirelessly works to counter the propaganda of the commercial investment industry to provide the best and most profitable investment strategies to our clients year after year. Follow us on Twitter.
Republishing rights: The above article may be republished as long as all text and links remain intact in their entirety, including the above author acknowledgment.

Hundreds of millions of investors worldwide, influenced by the propaganda of Western bankers, have consciously made poor decisions not to own a single ounce of physical gold and physical silver today. One of the first realities an investor must understand about the gold and silver market is that the Economics 101 concept of price being set by physical supply and physical demand is an utter lie.  In today’s world of banking and financial industry lies, the price of gold and silver are NOT set by the physical demand and physical supply of either of these metals, but rather by the artificial supply and demand of paper contracts predominantly backed by no physical metal.

By now, the following facts are very well known by seasoned physical gold and physical silver buyers but likely still unknown to the average investor worldwide. A CPM Group document released in the year 2000 stated, “With the start of the London Bullion Market Association’s release of monthly trading data, the market has become aware that 100 times more gold and silver trade hands each year, just in the major markets, than is produced or used. Some market participants have wondered aloud how 10 billion ounces of gold could trade via the major markets each year, compared to 120 million ounces of total supply and demand, while roughly 100 billion ounces of silver change hands, compared to around 628 million ounces of new supply.”  Thus, one can see that the fraud perpetrated by bullion banks in the silver futures market exceeds even the fraud they commit in the gold futures markets.  Take the figures provided above, and a quick calculation reveals that bankers were trading nearly 160 times of paper ounces of silver every year than the annual physical supply of silver mined from the earth.

However, break down these numbers even more and the fraud becomes even more astounding.  While in 2000, about 628 million ounces of new supply of physical silver came to market, in 2010, mine production of new silver supply was slightly higher at 735.9 million ounces. Net government sales accounted for another 44.8 million ounces, old silver scrap provided an additional 215 million ounces, and producer hedging accounted for the final 61.1 million ounces. Thus a total annual supply of roughly 1 billion ounces of silver existed in 2010.  However, industrial usage, photography and jewelry used up nearly 78% of the one billion ounces of physical silver supply in 2010 and left less than 100 million ounces available for minting in the form of silver coins. (Source: The Silver Institute). Despite this tightness of new investment silver supply, there have been days in recent months when more than 250 million ounces of paper silver traded on the COMEX in less than one minute! During the times ridiculous volumes of paper silver were trading on the COMEX, usually the price of silver was plummeting in intra-day trading. Thus, bankers were clearly using this massive artificial supply of paper silver contracts to knock down prices.  On top of this fraud, bankers have stretched the landscape of imaginary supply of gold and silver with their introduction of the gold ETF, the GLD, and the silver ETF, the SLV, both of which started trading in 2006. Both the GLD and SLV are highly suspect, likely fraudulent vehicles that probably are either (1) only partially backed by physical gold and physical silver and/or (2) respectively backed by unallocated physical gold/silver that have multiple claims upon them. Again, fraudulent derivative paper gold and paper silver products create a perception of increased supply even when there is no REAL increase in the underlying physical supply or even at times when physical supply is shrinking. Bankers have created this mechanism specifically to suppress the price of gold and silver and to keep their Ponzi fiat currency scheme alive – a scheme that they utilize every single day to silently steal wealth from every citizen on this planet.

I have heard the criticisms levied against Eric Sprott and James Turk regarding their pro-silver and pro-gold stance in that they are just selling their books as PM fund managers and bullion dealers. However, I believe these criticisms to be patently unfair. I don’t believe that either Mr. Sprott or Mr. Turk are so enthusiastic about the future prospects of gold and silver returns because they just want to “talk their books”. Rather, I believe that they are so enthusiastic due to their deeper level of understanding about PM markets than the average retail investor and the vast majority of uneducated commercial investment industry advisers. Furthermore, I’ve been one of the most passionate supporters of gold and silver for the last decade and I have never acted as a bullion dealer, have never received any commissions from any sales of mining stocks, and have never accepted a single cent from any mining company to provide coverage of their company to my subscribing members though I have been approached many times to do so over the years.

To illustrate the level of misunderstanding that still exists about gold and silver prices, here’s one piece of investment “advice” that landed in my email inbox on August 16, 2008: “The barbarous relic – gold – is another good choice, usually. But gold has already appreciated from just over $300 an ounce six years ago to almost $900 today. It could be a little late.” This adviser went on to push stocks and confidently declared that stocks would be the “big winner” once again over the next several years. From August 16, 2008 until today, the S&P 500 has lost 2.92% while gold has risen +111.33% and silver, +284.47%. Stocks, the big winner? I think not. But selling stocks is the big bread and butter money winner of most commercial investment advisers so that is the primary reason why they overwhelmingly always push their clients into purchasing stocks as opposed to the real big winner of precious metals. I recall reading a newspaper article several years ago from a financial adviser in Florida that claimed she was proud of convincing here clients NOT to buy gold at $800 an ounce because the gold price was too expensive and that it was her duty to protect her clients against their own foolish impulses. On November 8, 2007, thousands of people that subscribe to my free newsletter read the following statements from me:

“So with gold over $800 an ounce, is it still cheap? Emphatically yes, and here’s why. I’m not really sure how all the ‘Gold at 27-year high’ headlines came to be, but… if we experience a correction any time soon, and gold breaks back down to the $720 level again before continuing higher, it will just be really cheap. Here’s why. Anyone that’s ever studied the formula that is used to calculate the Consumer Price Index(CPI)  in the U.S. knows that the formula has been greatly tinkered with over the years to produce absurdly low inflation numbers that are merely an artificially manufactured number that probably fits some pre-determined number the government would like to report.”

So back then, even with gold trading at $800 an ounce, the banker-owned and controlled media in the Western world was filled with stories about an imminent “gold bubble” collapse because gold was at a “27-year high.” It’s important to review history from time to time to be reminded how easily you may have accepted patently absurd proclamations about gold and silver prices in order to avoid falling victim to the same banker-originated and banker-spread propaganda today.  The reason I have been overly passionate about gold and silver for years and still am today is because it takes great passion to overcome the widespread ignorance and deceit spread by the commercial investment industry to their clients about gold and silver.

Let’s see how things have panned out in the stocks versus PM investment game over the past few years. From the launch of my Crisis Investment Opportunities newsletter on June 15, 2007 until July 25, 2010, in a little over four years, my newsletter has returned a cumulative profit of  +211.49%. Over the same investment period, the S&P500, the FTSE100, the ASX200, and top 5 ETF iShares Dow Jones EPAC Select Dividend Fund have respectively returned  -21.39%, -11.99%, -26.51%, and -2.69%. Furthermore, during the next four year period, from 2011 to 2015, I truly believe that an attainable goal for my Crisis Investment Opportunities newsletter is to double or even triple my previous four-year cumulative returns, simply due to the following three reasons:

(1) Western bankers are increasingly losing control over the price suppression schemes they have enacted against gold and silver through their creation of bogus paper derivatives;

(2) The conditions that have lead to Euro and US dollar devaluation are worse today than they were 10 years ago and no underlying fundamental problem of the 2008 financial crisis has been adequately addressed as of today; and

(3) The percentage of people that have the amount of faith I hold in gold and silver to produce superior returns around the world is still minute.

Thus, once the average Dick and Jane retail investor finally believe in the facts surrounding gold and silver versus the garbage propaganda disseminated by crooked bankers and ignorant advisers, the price of gold/silver and PM stocks will finally experience a truly parabolic rise.

Once a small percentage of retail investors worldwide, or even just a small percentage of retail investors in a densely populated country like China, finally realize that bankers have created insane massive paper supplies of artificial gold and silver backed by nothing but air and are consequently moved to purchase their first troy ounce of pure gold and/or pure silver, this very small action will exert tremendous upward pressure on the price of gold and silver. And once this happens, I hope that you will have already secured your physical reserves of gold and silver because it is then that PM prices will truly go ballistic.

About the author: In 2005, JS Kim walked away from the immorality of Wall Street to form his own fiercely independent investment research & consulting firm, SmartKnowledgeU. Freed from the deceit and massive restrictions of the commercial investment industry, JS has been guiding clients towards significant profitability ever since. Currently, JS is working on completing two short books that explain the fraud of the modern banking system in simple terms and plans to donate 100% of all profits from these books to orphanages in S. Africa, Vietnam, and Thailand. Visit us at http://www.smartknowledgeu.com to be informed of their release andFollow us on Twitter.

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