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Going forward as your cash flows improve, one of the ways to combat the naked shorting of your stocks is to provide to your shareholders the option to receive small quarterly dividends in your own products, gold and silver.
Yes I know, those with cash flow will be on a merger and acquisition mania, scooping up the small producers and explorers. But this phase will pass and fall to a more sustainable level. I watched the same phenomenon unfold in the Canadian oil juniors markets last decade.
But returning dividends, not in cash, but in metal, is an extremely attractive proposition and certainly not a new thought. I have proposed it in the past. I was reminded of this while listening to an interesting audio interview that Jim Sinclair had with KWN. The problem is how one can manage the logistics. And so here is something to think about.
A producer or trust could do a direct distribution of physical but this would be awkward and costly. Distribution of things to shareholders is not their business, and requires a certain amount of expertise and infrastructure.
Rather, a producer could work with a group like Sprott to set up a physical gold and silver trust in the manner of a hard closed end fund like the Sprott Physical Trusts with redemption rights. Or they could work with some firm like Goldmoney, supplying them with bullion and then issue certificates to shareholders. Outsourcing the logistics might be the best solution.
This would require the naked shorts to start handing over physical gold and silver, which is much more difficult to do than to provide more paper.
Just a thought and not a complete plan, and the details are quite important. But there are several methods of rewarding shareholders while pulling in the reins on the naked shortsellers, and this is one of them.
Pleading with the regulators to do their jobs may not be fruitful, considering how the banks seem to have their way with them.
And if you are a junior, make it a priority to list on a major exchange in the States. The games being played on the Canadian exchanges are disgraceful, almost as bad as the US futures markets. And the US pink sheets are a snakepit, even by the current low standards of transparency and efficient in equity markets.
Here is what I am watching this morning. There is a potential bull pennant, but the 50 DMA represents an obvious point of interest.
The devastating earthquake in Japan completely overshadowed the Middle East this morning, and the Saudi Day of Rage was subdued. I am exchanging emails with a friend who is riding out the troubles in the Shinjuku district while he waits for the trains to resume so he can head home.
My heart goes out to all my friends in Japan, and all those who are in distress everywhere.
がんばって Ganbatte.
I thought some of the book-talking commentary from Japan bears early this morning was a bit over the top even for pigmen.
In the spirit of never wasting a crisis, the Masters of the Universe staged a major bear raid on the metals complex this morning. I had to steel my resolve and pick up some positions at deep discounts to reality in the opening half hour of trade. Easier said than done.
Silver is in delivery now and the negotiations for cash settlement are introducing noise into the markets. Their hypocrisy knows no bounds, so prepare for additional swings as their massive short position is in its death throes. It will not be pretty.
“So do not be afraid of them, for there is nothing which they conceal that will not be revealed, or hidden, that will not be made known. What is spoken in the dark will be heard in the light; what is whispered in the ear will be proclaimed from the rooftops. Do not be afraid of those who can harm only your body but cannot take your soul. Rather, be afraid of the One who can destroy both body and soul in hell. " Matt 10:26-28
These events in the Middle East and Japan provide the perfect rationale for the Fed's QE3.
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| Let's play a game. |
The metals and stocks in general corrected today on weak US economic news and reports of growing unrest in Saudi Arabia, especially ahead of tomorrow's 'day of rage.'
Is this anything new? Not really, although traders finally decided to acknowledge the weak US economy and growing unrest throughout the Mideast, so in that sense, it is 'new.'
I mentioned the other day that Blythe is being given some time and some leeway to 'fix her problem,' and the raids that swept the markets today were part of the trade. Take them up, get mom and pop leaning in, and then wash and rinse their position out for a trade.
And certainly the markets were overdue for a correction. How deep a correction we will find out tomorrow, since the key markets have dropped down in many cases to pivotal support. I have clarified a possible bull pennant forming up on the March SP 500 futures and the associated pivot. The 50 DMA on the futures is around 1299 and so that must be watched closely.
It may be clearer now why I repeatedly show my own positions as a paired trade, long the metals and short the US equity indices with a varying emphasis. It makes these corrective drops much less distressing, and provides cover if one should decide to add new positions on retracements and weakness.
Remember, we sell strength and buy weakness; easy to say but hard to do.
Harvey Organ had some very interesting data in his commentary this evening. I thought his comment at the end about mining shares would also be of interest. He describes what sounds quite similar to what Citi had called its 'Dr. Evil' strategy in the eurobonds markets. Interesting that if what Harvey says is true, then the banks are engaged in a what sounds like a clearly criminal conspiracy to defraud the markets through price manipulation. No wonder so many people were upset by Andrew Maguire's testimony to the CFTC, as he alleged to be receiving the word to pull the bids by a certain bank-who-must-not-be-named. And he previously demonstrated it to the CFTC, and was met with a yawn until commissioner Brad Chilton acted, later to be brought to heel by CFTC Chairman and Goldman Sachs doyen Gary Gensler.
"Before I head over to the comex, for those newcomers, let me outline how the raid is orchestrated over at the comex. First the bankers send a signal the day before that a raid is coming. You need to get all the bankers in line that the raid is on for the next trading day. Then the bankers who also represent investors tell investors to hold their bids for later in the day. They will obtain gold and silver cheaper and thus they withhold their bids.
Then the bankers offer huge number of contracts at the opening with hardly anybody bidding. This dramatically forces the price down and in turn it trips all of those stop losses which in turn fuel another downturn. The bankers do not have any signal for a retreat. They only know to keep supplying massive contracts.
With 20 minutes to go, they start covering their shorts as quick as they can. Whatever they cannot cover, it increases the banks total shorts in the precious metals and he see this in the COT report. I will report on this on Saturday but the COT report is from last Tuesday to this past Tuesday. I will not pick up the major raid today.
That is the mechanics of the raid...
Many are calling me about the gold and silver shares. I think you should all be careful here as we are playing with crooks. The bankers are shorting gold and silver shares like crazy and they do not cover their shorts.
They use the money received for their nefarious activities. When time comes to deliver the shorted stock certificate, they say sorry I do not have the certificate. They are then in default and go on a list called failure to deliver or FTD's. The list of FTD's is enormous!! and our regulators do nothing to correct this!
The owner of the clearing house in the states is the DTC and you guessed it..who owns this fraudulent vehicle? JPMorgan and fellow bankers.
So please be careful when you buy mining companies. Please register your certificate and do not lose sleep over a falling mining share prices. However make sure your mining company is a producing mine and in good geographical areas where there would not be confiscation."
Portrait of a Bear Raid on the Precious Metals - Harvey Organ
And before we all walk around with puss faces about the 'losses' from the heights of our recent gains in the metals, keep in mind how well we all are doing overall.
A smackdown in the metals keeps our heads from growing too big for our bodies to hold up. The gains are always due to our genius of course, and the 'losses,' well those must be due to bad advice from somewhere else, or some similarly irrelevant superstitious thing. We seek to explain the ups and downs where the explanation is so obvious: things go up and down, and never straight up. Is the primary trend broken? Not yet. Have the fundamentals changed? No, not at all.
To be strong you have to own your trades. I had to learn this lesson the hard way, and chances are you will too. The greatest curse is an early and easy success, and the euphoria of thinking we are greater than we really are.
This is why it is better not to be a trader, because you cannot afford the dues, and if you are successful, you will see the darker sides of human nature and face temptations that are almost overwhelming, especially in times of general apostasy.
Take your positions and hold them, without leverage, and with realistic expectations. And then go do the things that you are well suited to do, and address the needs of your family and your friends, and enjoy what you have, the gifts of life and God's tender mercies. And when you need the occasional wake up call, He will provide that too.
