Rent A Safe

April 4, 2000

My last few articles have generated much greater volumes of e-mail than usual. The vast majority have gone unanswered by me. Invariably, I am asked which mining stocks should be bought, based on their hedge position. The other question is when is the price of silver about to take off. Let's see if I can answer those questions now.

As far as mining stocks, I am not your investment advisor, nor an investment advisor. I have written on the Internet in order to make open the scam that the precious metals market has evolved into, and to hasten the termination of the manipulation. While I certainly don't wish you investment misfortune, I do not choose to render investment advice. Trying to decipher which mining company holds what short position, and changes to that short position, is the responsibility of the investor. A company that is not hedged today, may get short tomorrow. I will not get caught up in that. I hope you understand. I don't give investment recommendations.

As far as when silver will move, I don't know. How anyone could expect me to know is beyond me. I'm trying to be an analyst, I am not a prophet. You can accept my reasoning and analysis, or you can reject it. I can tell you that silver will move. It will move faster and higher than anyone imagines. Those asking me when, should be asking a different question - how? How will silver move, when it does move?

When silver moves for real, it will be a discontinuous event. We will wake up one day, amid bearish chart formations and negative news stories, and we will end that day double or triple the previous day's price. What will matter is not when you bought silver, but if you bought it. If you are looking to buy silver the day before it explodes, good luck.

What will also matter is what form you bought it in. Obviously, if you bought silver in the form of a mining company that is massively short silver as part of a hedge, I would imagine a mining company not short silver would fare better. If you bought silver in paper or certificate form, and your counterparty can't honor the transaction because they don't have real silver backing it up, you will have a problem. With billions of ounces of paper contracts and bank certificates of silver outstanding, I would imagine the vast majority to be a problem, as there are not billions of ounces of real silver backing them up.

Just this past week, it was revealed that Handy & Harman, the largest silver refiner in the world, declared Chapter 11 Bankruptcy protection, and had virtually ceased shipments on March 15. Handy & Harman was a most respected name in the precious metals world. I would imagine, that if you had physical silver on deposit with them, you now have a problem. (Also, if you are a silver user who relied on Handy & Harman as your supplier, you also have a problem. See my article for silver users). Let me ask you a question - if one of the most respected names in the precious metals world, Handy & Harman, can announce out of the blue, that it is bankrupt and cannot honor its obligations - who can be trusted? If the largest silver refiner can't meet its silver obligations, do you think a bank or insurance company can?

In fact, the Handy & Harman bankruptcy will serve as the model for the resolution of the great silver manipulation. It's so simple. Crooked shorts sell uneconomic quantities of silver that they can't deliver on, driving down the price for years and years, amassing obscene profits. Then, when the moment of truth arrives, they declare bankruptcy and walk away from their obligations. It is the perfect scam.

What can you do about it? Hold your own silver. Yeah, I know, it's cumbersome and logistically difficult to deal in physical silver. It's so much easier to make a phone call and own paper silver. The irony of ironies is that silver is so cheap, that you actually get too much for your money. It's hard to handle the sheer bulk. Life's tough.

But before you make the easy choice and make that phone call, for paper silver, ask yourself this - if they had it to do over again, would the silver creditors of Handy & Harman do it the easy way?

Gold's special properties mean that it has a greater variety of uses than almost any metal.

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