Britannia Radio

The Daily Reckoning Weekend Edition Saturday, April 16, 2011 Rio de Janeiro, Brazil ------------------------------------------------------- Another look at what silver - screaming yelping silver - is telling us now, Inflation hedges: Gold vs. Silver vs. TIPS...what's your bet? Plus, all this past week's reckonings, archived for your silver-lined reading pleasure... ------------------------------------------------------- New Presentation: Leading Micro-Cap Stock Expert Reveals Epic Wealth Potential See how you could turn just $500 into $6.4 million, even $19 million - in just 30 days. This amazing presentation closes at midnight Sunday. Watch it now, right here... --------------------------------------------------------- Joel's Note: We're compiling some notes on banking in Uruguay and beaching in Brazil this weekend, Fellow Reckoner...notes we hope to have to you next week. And so, on this bright and sunny Saturday, we're handing you over to long time friend of The Daily Reckoning and all- round nice guy, Adrian Ash, for the word on silver. Adrian, who now heads up research at BullionVault.com in London, sent along his always interesting - and mighty timely - observations to us late yesterday. Given that gold's perennial bridesmaid was at the time seen mounting an assault on $43 per ounce, we thought it best to get his notes to you right away. Please enjoy... What Is Silver Screaming About? by Adrian Ash London, England The current surge in bids to buy silver might seem dramatic, but it's more measured by far - to date, at least - than the true silver bubble of September 1979 to January 1980. Even so, you may as well call this a record price. In real terms, as Matt Turner at Mitsubishi told me this week, one ounce of silver briefly rose above 40 of today's US dollars per ounce in 1864, when the American Civil War neared its climax. In nominal dollars, the Hunt brothers' multi-billion-dollar corner only saw it more highly priced on 5 trading days in January 1980. And while US investors waiting to buy silver are also still waiting for it to record a new intra-day high, it's already broken new ground against the British pound and for most of the Eurozone, too. The cause? Gold investors have long tried to explain how the metal is "telling us" something. "First warning" of the looming financial crisis, said Marc Faber in his Gloom, Boom & Doom Report of September '07, was when "the price of gold more than doubled in nominal terms and against the Dow Jones Industrial Average [because of] ultra- expansionary US monetary policies with artificially low interest rates." In which case, and with global interest rates further below zero today after inflation than at any time since 1980, what in the hell is silver telling us now? "TIPS pay a lower rate of interest than regular Treasuries," explained Bloomberg Newswhen the yield offered by 5-year Treasury Inflation Protected Securities briefly dipped below zero (and $20 silver broke a 28-year high) back in March 2008. "[That's] because their principal rises in tandem with a version of the consumer price index which includes food and energy prices. Rising demand for TIPS [which pushes up prices and so pushes down the nominal yield] indicates investors expect the inflation adjustment to make up the difference." What great expectations TIPS buyers must have of Uncle Sam's "inflation adjustment" today! They're buying 5-year index-linked bonds with a nominal yield of minus 0.6%, anticipating a full 2.8% per year fillip from Washington when compared with the annual yield now offered by conventional 5-year bonds. And what greater hopes still must the new rush of silver investment hold...rejecting TIPS in favor of metal, and breaking silver's tight connection with both gold prices and TIPS yields as our chart above shows. Note the point at which silver breaks higher - right when Fed chairman Bernanke vowed to begin QE2 in summer last year. That a fast-growing nugget of the world's private wealth is fearful of the result is clear. That silver looks a turbo-charged play is clearer still. Because as an industrial as well as monetary metal, silver is exposed to strong economic growth - as well as loose central-bank policy - in a way that its cousin, gold bullion, isn't. You could point to 2010's record levels of Indian and Chinese gold demand coming off their continued economic booms, but Asia's silver investment demand is surging faster still. And the aim of all this easy money, remember, is to keep GDP stoked, whether in Beijing, Washington, Frankfurt or London. Little wonder then that Chinese, US, Eurozone and UK inflation is rising sharply. And so no wonder either then that... By value, London's wholesale bullion market last month saw silver volumes jump to one-sixth the daily turnover of gold plus silver, according to the LBMA's new stats, released to members today. That's a 13-year high. In raw dollars, silver turnover set new all-time records for the second month running. By number, New York's Comex saw the volume of silver futures contracts overtake the volume of gold futures on Monday and Tuesday this week. By value, silver trading rose to one-seventh of total gold and silver volumes, up from a seventeenth just a month ago. ETF Securities say their silver exchange-traded products saw "more flows than any other individual commodity ETP" in the first quarter. Here at BullionVault - the world's largest gold ownership service online - our customers have pushed silver trading up from 22% of daily volumes by value in January to 27% in both March and so far in April. There's no bull market like a silver bull market, in short - just ask the Hunt brothers ahead of their bankruptcy, eight years after their corner blew up with the big inflation-fueled 1970s' bull market. Double-digit Fed interest rates popped the bubble back then (plus a good dose of anti-speculative action by regulators and the exchanges, otherwise known as "saving the system" of course. It was sparked in turn by the Hunt brothers' own naked greed, otherwise known to them as "inflation protection"). The most recent time silver got hot, however, it took oil at $150 and then the Lehman Brothers' collapse to do to GDP growth and commodity prices what central bankers wouldn't dare. Because raising interest rates to double digits to kill a "speculative frenzy" wasn't politically possible. Silver's bull run, unlike gold's, is all about inflation. Which is worth bearing in mind whether you're quitting, holding, ignoring or looking to buy silver today. Regards, Adrian Ash for The Daily Reckoning Joel's Note: Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault - winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the World Gold Councilmarket- development and research body - where you can buy gold and silver today. ------------------------------------------------------- Secret "Golden Staircase" Creates Mining Multi-Millionaires! And the $1.73 stock that grabbed this massive gold find could rocket to $27 or more... Click here to discover how to claim your stake of the "Golden Staircase" before the mainstream has a clue... ------------------------------------------------------- ALSO THIS WEEK in The Daily Reckoning... Investment Legends, Part II By Jeff Clark Stowe, Vermont What will happen to the US economy and the dollar in the near term? Will inflation increase dramatically? What is the outlook for gold, and where should you put your money? BIG GOLD asked a world-class panel of economists, authors, and investment advisors what they expect for the future. Caution: strong opinions ahead... The War on Money By Jeff Berwick If you keep your money or savings in US dollars inside of the United States, you are a risk taker of epic proportions. Have you not been paying attention to what is going on? To begin with, the US Government now employs cash-sniffing dogs at most international airports. If you are carrying more than $10,000 in cash and don't declare it to the Government when coming in or out of the US, your cash will be seized. Thanks to these cash-sniffing canines, US customs officials seized $3.2 million at Boston's Logan Airport last year. SMS: Nvst B4 It's 2 L8 By Patrick Cox Marco Island, Florida I've written quite a lot in the past about the battle between Microsoft and Google. That battle, however, is actually an outgrowth of another more fundamental tension in the information technology, or IT, world. I'm speaking of the open source versus proprietary operating system (OS) argument. This argument has suddenly become even more important as we watch another computer era come to an end. Open Source Finally Wins By Patrick Cox Marco Island, Florida While some economists say that Microsoft has been good for computing and America, I think that its negative impact on third-party developers may be greater. If you want to sell a product that runs on the Microsoft OS but are not a chosen partner of the company, you're going to be at a severe disadvantage. Those disadvantages don't exist in the server world, because Linux standards are open, giving no one special privileges. This allows more and faster innovation, which is what I care about most. Silver Is Getting Too Popular... Right? By Jeff Clark Stowe, Vermont It's no secret that the silver market is red hot. As I write, silver American Eagles and Canadian Maple Leafs are sold out at their respective mints. Buying in India has gone through the roof, especially noteworthy among a people with a strong historical preference for gold. Demand in China continues unabated. Silver stocks have screamed upward. ------------------------------------------------------- 369%, 545%, Even 1,329% Gains - Always in Five Days or Less It's true! This has nothing to do with buying stocks, bonds, or gold. It's not funds or dividends or real estate. Click here to learn the secret behind this amazing market instrument. ------------------------------------------------------- The Weekly Endnote: So what do you reckon, eh? Is silver in a bubble? What about gold? Will we see $50 silver by year's end...or a collapse back into the $20s? $1,600 an ounce gold? Or back into the $1,100s? Let us know what you think - and why you think it - at the address below. And, in the meantime, have fun counting those coins this weekend. Until next time... Cheers, Joel Bowman Managing Editor The Daily Reckoning ------------------------------------------------------- Readers who are interested in exactly what Bill is doing to protect and grow his own family wealth will do well to take a look at his Bonner & Partners Family Office project. In it, Bill and his team of international analysts, contrarian thinkers and specialists work to devise creative, though low-risk investments to build long-term financial security. Feel free to take a look at a personal invitation, from Bill's son, Will, right here. ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor atjoel@dailyreckoning.com The Daily Reckoning - Special Reports: Gold: The Truth About Gold Fiat Currency: Using the Past to See into the Future Have You Heard of the OTHER Government Backed "Pension Program?"