Silver Stock Report: The Halloween Prophecy

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The Halloween Prophecy

(Feast of Trumpets, Rosh Hashanna, Samhain, & etc!)

Silver Stock Report

by Jason Hommel, October 28th, 2010

Through research over the last ten years, I have come to believe that Halloween is a prophetic rehearsal that shows the return of Jesus, the resurrection of the dead, and the rapture to heaven.

I believe the meaning of Halloween symbols, are as follows:

The candy is a symbol of heaven.
The door is a symbol of Jesus.
The dressing up as skeletons, zombies, and ghouls are a symbol of those who will be resurrected.
The jack-o-lanterns, pumpkins carved out with a candle light in them, are a symbol of the dead being filled with the light of the Holy Spirit.

It's called Halloween, because it's the Hallowed Eve, or "Holy Evening".  The word "Hallowed" is a Biblical word, as in "Hallowed be thy name," from the Lord's prayer.

It's practiced on the evening of the last day of the month, because in the Bible, the day begins at dusk.  "And there was evening, and there was morning—the first day." from Genesis 1.

The Biblical Feast of Trumpets, or Rosh Hashanna, begins on the first day of the seventh month.  Num 29:1, Lev 23:24

Rosh Hashanna is celebrated by Jews today, and usually falls in mid September, on the day of the new moon.  The new moon is always the start of the month, on the Hebrew Lunar calendar.  Therefore, every new month really begins on the evening, at dusk, of the last day of the month.

Halloween starts on the evening, dusk, on the Gregorian Calendar, on October 31st, which is when the kids go out door to door to get candy. 

I believe this festival was practiced, in some related form, by the Ten Lost tribes of Israel who were exiled 720 years before Christ.  Thus, they likely do not know who they are, nor do they even know the prophetic Christian symbology of the feast, since they did not yet have the New Testament to explain the symbols when they were exiled.

http://en.wikipedia.org/wiki/Ten_Lost_Tribes

Halloween has many similarities to the Biblical Feast of Trumpets, which, today, is called Rosh Hashanna, and is practiced by the Ashkenazi Jews, who are thought to be of the two southern tribes of Israel, Judah, with whom the Northern tribes had a dispute prior to exile.

I know of nobody else in the world who teaches this.  So then, why do I believe this?  Because I'm probably one of the top 50 researchers and teachers of the Biblical themes taught in the Feast of the Lord called the Feast of Trumpets, Rosh Hashanna, and I can see the many similarities to Halloween.

When I first started my research ten years ago, wikipedia did not even exist; so I'm getting excited by what I'm learning today. 

The wikipedia article on Rosh Hashanna does not teach all of the Biblical symbols of the Biblical Feast of the Lord, because the Jews today still reject Jesus, and thus, reject the teachings of the New Testament, which greatly aid in the understanding of the prophetic themes of the Feast of Trumpets. 

Christians today mostly don't know about these themes either, because they mostly reject the law, and reject things that are considered "Jewish", such as the Feasts of the Lord.

Furthermore, most Christians condemn Halloween as a pagan holiday that unduly worships the dead and the Satanic, somehow forgetting that the essence of Christianity is the resurrection of the dead.

Most Biblical researchers don't know about these things either, because the Bible does not say very much about how to celebrate the Feast of Trumpets, nor does it explicitly say much about the meaning of the symbols.

But here are a few scriptures that I've gathered together that do explain a few themes about this Feast of the Lord.

http://bibleprophesy.org/feastoftrumpets.htm

Here are a few studies on the Feast of Trumpets, and a bit of an introductory summary:

http://bibleprophesy.org/introtrumpets.htm

One of the themes of the Feast of Trumpets is the Wedding; as the Church is married to Jesus.  So, here are my studies on the Marriage in Scripture, as it relates to the prophecy of the rapture.

http://bibleprophesy.org/introwedding.htm

The wedding or marriage as a theme is something that is not seemingly related, or not a part of it, if you simply study the Jewish Rosh Hashanna.

http://en.wikipedia.org/wiki/Rosh_Hashanah

Nor is the wedding a key theme of Halloween.  But in Mexico, among the prostitutes and drug dealers, there is a celebration called the "day of the Dead".  They dress up a skeleton as a bride, with a lantern, and eat candy skulls.

The picture of five wise virgins and five foolish brides with lanterns is shown in Matthew 25:1-13.  I have a study on why that parable is a picture of the rapture, here:

http://bibleprophesy.org/tenvirgins.htm

Why are the so-called "ungodly" people in Mexico observing this holiday?  Well, those are the kinds of people God often speaks to, and calls to him.

Jesus said to the religious leaders of his day, "tax collectors and the prostitutes are entering the kingdom of God ahead of you." Matthew 21:31-32.

1 Corinthians 1:26-29
 26 For consider your calling, brothers: not many of you were wise according to worldly standards, not many were powerful, not many were of noble birth. 27 But God chose what is foolish in the world to shame the wise; God chose what is weak in the world to shame the strong; 28 God chose what is low and despised in the world, even things that are not, to bring to nothing things that are, 29 so that no human being might boast in the presence of God.

Let's examine the main themes of Halloween, starting with candy.

Candy is associated with the celebration of the Feast of Trumpets, as shown by Nehemiah 8:1-10:  10 Then he said unto them, Go your way, eat the fat, and drink the sweet, --" 

I wonder, how did Nehemiah know that about sweets, when the Bible never directly says to eat sweets on this day?  The answer must be tradition.

Candy apples are a tradition of both Halloween and Rosh Hashanna.

http://en.wikipedia.org/wiki/Halloween#Foods

"Because the holiday comes in the wake of the annual apple harvest, candy apples (known as toffee apples outside North America), caramel or taffy apples are common Halloween treats made by rolling whole apples in a sticky sugar syrup, sometimes followed by rolling them in nuts."

http://en.wikipedia.org/wiki/Rosh_Hashanna#Symbolic_foods

"Symbolic foods

Rosh Hashanah table set with symbolic foods Rosh Hashanah meals usually include apples and honey, to symbolize a sweet new year."

Nehemiah wasn't the only man in the Bible to observe this feast.

The Bible says that Joseph in Egypt made it a decree to celebrate this day.  That was about 400 years before Moses gave the law in Numbers and Leviticus.  Interestingly, it does not say this in Genesis, but in the Psalms!

Pss 81:3 Blow the trumpet at the new moon, at the full moon, on our feast day.
Pss 81:4 For it is a statute for Israel, an ordinance of the God of Jacob.
Pss 81:5 He made it a decree in Joseph, when he went out over the land of Egypt. I hear a voice I had not known:

Many Biblical practices and traditions pre-date the law of Moses. Animal sacrifice and marriage do, too.

Some people think Jesus was against traditions.  But Jesus said, "Mark 7:13 Making the word of God of none effect through your tradition, which ye have delivered: and many such like things do ye."

In other words, if traditions that invalidate the word of God are bad, then the corollary of that would be that traditions that validate the word of God, such as Halloween and the Feasts of the Lord, such as the Feast of Trumpets, would be good!

What's the next symbol of Halloween, the door?

Jesus is the door.  John 10:9 "I am the door"

On the new moon, every month, at the start of the month, the door of the temple is open.

Ezek 46:1 "Thus says the Lord GOD: The gate of the inner court that faces east shall be shut on the six working days; but on the Sabbath day it shall be opened and on the day of the new moon it shall be opened.

The door is also a symbol in the parable of the virgins in Matt 25:1-13, and in Revelation 3-4, key rapture verses.

Revelation 4:1 After this I looked, and, behold, a door was opened in heaven: and the first voice which I heard was as it were of a trumpet talking with me; which said, Come up hither, and I will shew thee things which must be hereafter.

To Philadelphia:
Rev 3:8 I know thy works: behold, I have set before thee an open door, and no man can shut it: for thou hast a little strength, and hast kept my word, and hast not denied my name.
Rev 3:10 Because you have kept my word of patient endurance, I will keep you from the hour of trial which is coming on the whole world, to try those who dwell upon the earth.

Next Halloween symbol, the skeletons.  Dry bones are mentioned also in Ezekiel as a starting point of the resurrection in Ezekiel 37:1-11.  The passage reads as if it is a scene right out of a modern zombie movie.

Ezekiel 37

The Valley of Dry Bones

 1 The hand of the LORD was upon me, and he brought me out by the Spirit of the LORD and set me in the middle of a valley; it was full of bones. 2 He led me back and forth among them, and I saw a great many bones on the floor of the valley, bones that were very dry. 3 He asked me, "Son of man, can these bones live?"
      I said, "O Sovereign LORD, you alone know."
 4 Then he said to me, "Prophesy to these bones and say to them, 'Dry bones, hear the word of the LORD! 5 This is what the Sovereign LORD says to these bones: I will make breath enter you, and you will come to life. 6 I will attach tendons to you and make flesh come upon you and cover you with skin; I will put breath in you, and you will come to life. Then you will know that I am the LORD.' "

 7 So I prophesied as I was commanded. And as I was prophesying, there was a noise, a rattling sound, and the bones came together, bone to bone. 8 I looked, and tendons and flesh appeared on them and skin covered them, but there was no breath in them.

 9 Then he said to me, "Prophesy to the breath; prophesy, son of man, and say to it, 'This is what the Sovereign LORD says: Come from the four winds, O breath, and breathe into these slain, that they may live.' " 10 So I prophesied as he commanded me, and breath entered them; they came to life and stood up on their feet—a vast army.

 11 Then he said to me: "Son of man, these bones are the whole house of Israel. They say, 'Our bones are dried up and our hope is gone; we are cut off.' 12 Therefore prophesy and say to them: 'This is what the Sovereign LORD says: O my people, I am going to open your graves and bring you up from them; I will bring you back to the land of Israel. 13 Then you, my people, will know that I am the LORD, when I open your graves and bring you up from them. 14 I will put my Spirit in you and you will live, and I will settle you in your own land. Then you will know that I the LORD have spoken, and I have done it, declares the LORD.' "

The final Halloween theme, is the jack-o-lanterns.

Again, revisiting Matthew 25:1-13, we read about the importance of keeping the lamps lit.  Lamps that are lit are symbolic of readiness for the return of the Lord, and are a symbol of being filled with the Holy Spirit.  The symbol of the door is also highlighted in this passage.

The Parable of the Ten Virgins

Matthew 25 1"At that time the kingdom of heaven will be like ten virgins who took their lamps and went out to meet the bridegroom. 2 Five of them were foolish and five were wise. 3 The foolish ones took their lamps but did not take any oil with them. 4 The wise, however, took oil in jars along with their lamps. 5 The bridegroom was a long time in coming, and they all became drowsy and fell asleep.
6 "At midnight the cry rang out: 'Here's the bridegroom! Come out to meet him!
7 "Then all the virgins woke up and trimmed their lamps.
8 The foolish ones said to the wise, 'Give us some of your oil; our lamps are going out.'
9" 'No,' they replied, 'there may not be enough for both us and you. Instead, go to those who sell oil and buy some for yourselves.'
10 "But while they were on their way to buy the oil, the bridegroom arrived. The virgins who were ready went in with him to the wedding banquet. And the door was shut.
11 "Later the others also came. 'Sir! Sir!' they said. 'Open the door for us!'
12 "But he replied, 'I tell you the truth, I don't know you.'
13 "Therefore keep watch, because you do not know the day or the hour.

Not knowing the day or hour is also a description of the Feast of Trumpets.  The new moon falls on every 29 and a half days.  Thus, there is slight uncertainty on which day it might exactly fall, especially if the observance of the prior new moon was hidden by clouds.

Hiding is also a theme of this Feast.

A bride hides her face with a veil.

Kids mask their faces with costumes.

Believers will be "hid" in heaven for 7 years, the length of the tribulation.  And here are three passages on that:

Zeph 2:3 Seek ye the LORD, all ye meek of the earth, which have wrought his judgment; seek righteousness, seek meekness: it may be ye shall be hid in the day of the LORD's anger.

Pss 27:5 For in the time of trouble he shall hide me in his pavilion: in the secret of his tabernacle shall he hide me; he shall set me up upon a rock.

Isa 26:20 Come, my people, enter thou into thy chambers, and shut thy doors about thee: hide thyself as it were for a little moment, until the indignation be overpast.

So, that's a summary of the themes.

Here are other cultures, and other versions of this feast.

In Mexico, they actually hid their observance of this feast until recently.

"In contrast to the Day of the Dead, overt worship of Santa Muerte (Dead Saint) remained hidden until the 19th century. When it surfaced, reaction was harsh, requiring the burning of any image found."

http://en.wikipedia.org/wiki/Santa_Muerte

http://en.wikipedia.org/wiki/Day_of_the_Dead

Daniel also said that in the last days, knowledge would increase.

Halloween is also related to All Saint's Day and the Celtic feast, Samhain.

Rosh Hashanna is, according to the Jews, the new year.

Samhain is also the new year to the Celts. 

http://en.wikipedia.org/wiki/Samhain

"Many scholars believe that it was the beginning of the Celtic year.[3][4][5]"

The Gaelic custom of wearing costumes and masks, was an attempt to copy the spirits or placate them. In Scotland the dead were impersonated by young men with masked, veiled or blackened faces, dressed in white.[7][8] Samhnag — turnips which were hollowed-out and carved with faces to make lanterns — were also used to ward off harmful spirits.[8]

The Gaelic festival became associated with the Christian All Saints' Day and All Souls' Day, and has hugely influenced the secular customs now connected with Halloween, a name first attested in the 16th century as a Scottish shortening of the fuller All-Hallows-Even.[9] Samhain continues to be celebrated as a religious festival by some Neopagans.[4][10]

Samhain is a Celtic festival.  Some scholars say the Celts are one of the ten lost tribes of Israel.

The Celts are Israelites Under Another Name.
http://jahtruth.co.uk/celtisr.htm

That would mean that the Celts, the Lost Israelites, likely had customs and feasts that are likely similar to the original Feasts of the Lord.

The main Biblical symbol that is missing in Halloween is the trumpet.

But there is a symbol of a Cornucopia, a "horn of plenty" in Northern America that is often associated with the fall feast known as Thanksgiving.  The Cornucopia is a twisted horn, and originally said to be a goat's horn, which is very similar to the ram's horn, or Shofar, used in Rosh Hashanna.

Compare the google images of the shofar to images of the cornucopia.

http://www.google.com/images?hl=en&source=imghp&biw=1525&bih=849&q=shofar&gbv=2&aq=f&aqi=g10&aql=&oq=&gs_rfai=

http://www.google.com/images?hl=en&gbv=2&tbs=isch:1&&sa=X&ei=--fJTL-yHoeCsQOAh8mQDg&ved=0CCQQvwUoAQ&q=cornucopia&spell=1&biw=1525&bih=849

In the wikipedia article on Halloween, they show that they knew this was a day the dead can come to life, which is a description of the resurrection, but historians don't even know why kids dress up for Halloween, only theorizing that they did so to ward off evil spirits.

"The ancient Celts believed that the border between this world and the Otherworld became thin on Samhain, allowing spirits (both harmless and harmful) to pass through. The family's ancestors were honoured and invited home while harmful spirits were warded off. It is believed that the need to ward off harmful spirits led to the wearing of costumes and masks. Their purpose was to disguise oneself as a harmful spirit and thus avoid harm."

The Feasts of the Lord are commemorations, rehearsals, like a play. 

The people are supposed to play out what is supposed to happen on this prophetic day.

On this day, Jesus will return, and raise the dead, and take them to be his bride, (changing them to immortality, like superheroes) and take them to heaven through himself, as he is the door.

To play that out, kids dress up as the dead, and go door to door (to Jesus) and get candy (heaven). 

Trick or treating is a means by which the custom continues, because if you don't play along, and give out candy to the kids, you get the trick instead, and get punished.

The original trickster was Jacob (Israel), who dressed up as his hairy brother Esau, to gain the birthright from the old Issac.

So, what does all of this mean?

Well, being one of the first people in history that I know of to make most of these connections, it causes me to speculate even further than what I've already done.

I think this is cultural evidence that Americans and those who celebrate Halloween and similar festivals are the Ten Lost Tribes of Israel. 

I think these festivals provide further confirming cultural evidence of the reliability of the Bible, and the reliability of the meaning of the symbols and themes of the rapture, as interpreted in light of the symbols of the Feast of Trumpets and Halloween.

I believe that God directly provides direct and continued inspiration to cultures who are willing to listen, and that these are the Feasts of the Lord, and that the Lord will have these feasts observed, period. 

Jesus himself said at the prophetic event of his entry into Jerusalem, "the rocks would cry out" if the people did not.

Luke 19:37 When he came near the place where the road goes down the Mount of Olives, the whole crowd of disciples began joyfully to praise God in loud voices for all the miracles they had seen:
38 “Blessed is the king who comes in the name of the Lord!”“Peace in heaven and glory in the highest!”
39 Some of the Pharisees in the crowd said to Jesus, “Teacher, rebuke your disciples!”
40 “I tell you,” he replied, “if they keep quiet, the stones will cry out.”

There is certainly a lot more that can be learned on this topic. 

Who am I as to be so audatious or bold as to make these claims and associations?

I'm merely a guy who has been preaching about honest money for the past ten years, in a culture that is 99.9% deceived about the nature of money.  I'm used to teaching things that should be common sense, but are unknown, or hidden.

You can find out more about me, Jason Hommel, and what I do, at
silverstockreport.com 
jhmint.com 
bibleprophesy.org

=====

I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can.  The fundamentals indicate rising prices for decades to come.

Our Coin Shops are open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends.

JH MINT & Coin Shop, Grass Valley, CA -- minimum $2000 order for free shipping, USA shipping only.
Kerri: (530) 273-8822
kerri.jhmint@yahoo.com 
(530) 273-8175
www.jhmint.com

See also my Mom's Silver Shop in Sacramento, CA
www.momssilvershop.com
3510 Auburn Blvd., #12
Sacramento, CA 95821
(916) 481 5656
(Mom will ship with no minimum order size, and overseas, and take credit cards and paypal.)

Sincerely,

Jason Hommel
In case you miss an email, check the archives (scroll down) at  www.silverstockreport.com  
For the Biblical case for the benefits of using honest money, see  www.bibleprophesy.org 

If you found this email useful, please Forward this email to your family and friends. This email was sent to silverstockreport@gmail.com by j@silverstockreport.com. Update Profile/Email Address | Instant removal with SafeUnsubscribe™ | Privacy Policy. Email Marketing by silverstockreport.com | 13241 Grass Valley Ave | Grass Valley | CA | 95945

Earn a 1oz Silver American Eagle for every 2 Affiliates that join.

Hello my friends.

If you have recieved this email its more than likely because you have an interest in Silver Bullion, and the protection of your buying power.

I have an online affiliate program that has been an amazing opportunity for me. I literally recieve free 1oz American Silver Eagles every sinlge month, PERIOD!

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This is for online marketers and business owners.

Contact me at adamdimora@gmail.com

Earn a 1oz Silver American Eagle for every 2 Affiliates that join.

Hello my friends.

If you have recieved this email its more than likely because you have an interest in Silver Bullion, and the protection of your buying power.

I have an online affiliate program that has been an amazing opportunity for me. I literally recieve free 1oz American Silver Eagles every sinlge month, PERIOD!

Please take a look at my site.
www.silversnowballinvestment.com

Then go to my affiliate site at www.silversnowball.com/1859

This is for online marketers and business owners.

Contact me at adamdimora@gmail.com

Earn a 1oz Silver American Eagle for every 2 Affiliates that join.

Hello my friends.

If you have recieved this email its more than likely because you have an interest in Silver Bullion, and the protection of your buying power.

I have an online affiliate program that has been an amazing opportunity for me. I literally recieve free 1oz American Silver Eagles every sinlge month, PERIOD!

Please take a look at my site.
www.silversnowballinvestment.com

Then go to my affiliate site at www.silversnowball.com/1859

This is for online marketers and business owners.

Contact me at adamdimora@gmail.com

Earn a 1oz Silver American Eagle for every 2 Affiliates that join.

Hello my friends.

If you have recieved this email its more than likely because you have an interest in Silver Bullion, and the protection of your buying power.

I have an online affiliate program that has been an amazing opportunity for me. I literally recieve free 1oz American Silver Eagles every sinlge month, PERIOD!

Please take a look at my site.
www.silversnowballinvestment.com

Then go to my affiliate site at www.silversnowball.com/1859

This is for online marketers and business owners.

Contact me at adamdimora@gmail.com

Silver Stock Report: Obama: Silver Salesman of the Year!

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Obama: Silver Salesman of the Year!

(Two years running!)

Silver Stock Report

by Jason Hommel, October 25th, 2010

Obama is an amazing gun salesman and silver salesman.  He's caused the gun sales by being a gun grabbing liberal.  He's an even better silver salesman than gun salesman though, since the sales of US Mint Silver Eagles has just about trippled on his watch, but I'd never even heard him mention the subject of silver.  That's quite a feat!

Politics this year has just not gripped me like other years. 

I'm optimistic for the future of the nation because there is a Tea Party backlash against out of touch Washington spending, socialism, and the continued erosion of our God given liberties that are recognized in the US Constitution.

But the truth of the matter is that I hardly care who wins. 

If liberals stay in charge, they will make things worse for the rest of the nation that probably deserves such punishment from God, and the dollar will go down, and it will mean higher prices for silver and gold.

If Tea Party Republicans get elected, their movement is still likely too small to make much of a difference, and they might raise more awareness of the importance of honest money, which will be bullish for silver and gold prices.

Thus, if you have silver, like I do, then either way the elections go, you win!

=====

Maybe I'm not paying much attention to politics, because I have more important things to focus on.

I'm a new dad again!

Hayden Jay Hommel was born on October 20th, 2010.  10-20-10

Even our local hospital nursery is aware of the importance of inflation.  They publish prices of a basket of common goods on the day new babies are born.

You can see a picture of this beautiful boy, and prices, here:

http://www.snmh.org/Patients_And_Visitors/Online_Nursery/index.htm?&vnMode=details&bId=671&sDate=2010-10-1&eDate=2010-10-31

Market Basket:
Loaf of Bread: $2.49
Gallon of Milk: $3.85
First Class Stamp: $0.44
Gallon of gasoline: $3.20
New Car: $21,750.00
Average New Home: $320,000.00

Hmmm, how about that milk, which I will be buying more of now?  What price was it in the year 2000, at the start of the bull market in silver?

http://wiki.answers.com/Q/How_much_did_a_gallon_of_milk_cost_in_2000_in_the_U.S.

Answer:

$2.75 to $3.00 a gallon

Yes, there has been inflation.  How much? 

Ah, the smartmoney compound interest rate calculator comes to the rescue again.

http://www.smartmoney.com/compoundcalc/

The inflation was a cumulative 40% for the last ten years, and an annual 3.42% gain per year.

How did silver do compared to milk?

Silver started at about $5 in 2000.  Today, it's about $23.66/oz.  Much better than milk.  Stores longer, too.  

Silver's gone up 760% for the period of the last ten years, which works out to an annual average of 24%.  That fairly beats out any other major monetary investment class, and it's only money, the best investment that there is, since it's the very definition of liquidity and money.
 
=====

And yet, the tiny silver market still only has about $2 billion of new investor money flowing into it annually.   It is tiny, tiny, tiny in the scale of world finance, and stands to gain about 30% per year, or more, on average, for decades to come.

The silver market is so small, and so few people are following it, that it's taken me literally ten years to figure out something very basic, because there are so few people following this market who would be available to bring this to my attention earlier than now.  This realization is that even tiny increases in the rate of inflation of new money will cause massive increases in the eventual dollar prices of silver, because the paper money market is already so obscenely large, and the silver market is still so ridiculously small.

=====

I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can.  The fundamentals indicate rising prices for decades to come.

Our Coin Shops are open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends.

JH MINT & Coin Shop, Grass Valley, CA -- minimum $2000 order for free shipping, USA shipping only.
Kerri: (530) 273-8822
kerri.jhmint@yahoo.com 
(530) 273-8175
www.jhmint.com

See also my Mom's Silver Shop in Sacramento, CA
www.momssilvershop.com
3510 Auburn Blvd., #12
Sacramento, CA 95821
(916) 481 5656
(Mom will ship with no minimum order size, and overseas, and take credit cards and paypal.)

Sincerely,

Jason Hommel
In case you miss an email, check the archives (scroll down) at  www.silverstockreport.com  
For the Biblical case for the benefits of using honest money, see  www.bibleprophesy.org 

If you found this email useful, please Forward this email to your family and friends. This email was sent to silverstockreport@gmail.com by j@silverstockreport.com. Update Profile/Email Address | Instant removal with SafeUnsubscribe™ | Privacy Policy. Email Marketing by silverstockreport.com | 13241 Grass Valley Ave | Grass Valley | CA | 95945

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Debates on Inflation & Gold Prices

(A Helpful Discussion!)

Silver Stock Report

by Jason Hommel, October 17th, 2010

Through debate, we all get the chance to see more clearly, and understand better who is right, and what the truth may actually be. 

1 Corinthians 11:19  For there must be also heresies among you, that they which are approved may be made manifest among you.

Proverbs 9:8 Reprove not a scorner, lest he hate thee: rebuke a wise man, and he will love thee.

A critic responds to my latest article:

Today: Low Inflation = Massive Gold Rise!
http://silverstockreport.com/2010/inflation-massive.html

Jason,
Were you born with insufficient gray matter or was this an acquired characteristic?
Your "thinking" is so flawed, it is far beyond funny.
 
michael

I replied to michael with:

Your insult would count if it contained reason, but absent that, it's static noise.

Michael replied respectfully with a long discussion of many points. 

I'm posting Michael's letter twice.  First, I'm copying Michaels original letter.  Second, below his letter, I post it again with my explanations inserted.  My comments are in bold.

=====

Jason,
Your response is very, very good and well appreciated.
It was my error in "thinking" that someone who would write such nonsense would be as open to discussion as you may be.
Thus, here goes:

REGARDING:  The most common myth or misperception in the gold market today goes something like this:
"Since inflation rates are low, then there's no reason for gold to go up very much."
This misunderstanding is expressed in many different ways, such as:
"Since the Consumer Price Index shows only 4% inflation, then gold should go up by no more than about 4% per year."
RESPONSE:  The CPI is around 1.5%, not even close to 4%.

REGARDING:  "When interest rates begin to rise, the more attractive rates will pull money out of gold and back into bonds."
RESPONSE:   That is true.  Obviously, the higher returns will attract a portion of funds from all other forms of investment.  Further, the carrying costs of holding gold will be greater.

REGARDING:  All of these statements are not true because they are only vaid when the world is on a fully backed gold standard.
RESPONSE:  What do you mean, "when the world is on a fully backed gold standard"?  LOL

REGARDING:  Instead, paper money is highly leveraged to the underlying gold.
RESPONSE:  What does that mean??  What is your "concept" of "paper money"?

REGARDING:  So much so that, only in theory could the gold be used to back up paper money, and only as a last resort if paper money began to die through rejection by the people, which leads to hyperinflation.
RESPONSE:  Throwing words together without meaning is not worth too much.  Please explain your rhetoric.

REGARDING:  There is about $15 trillion in the US banking system, and only about $0.35 trillion worth of gold to back it up, if the gold even exists, and has not been sold or leased into the market to try to manipulate the market and contain gold's price rise in dollars.
RESPONSE:  Do you have any idea of the intrinsic value of gold.  The "price" of gold may be higher or lower than its intrinsic value.
Further, gold does not back the wealth in the U.S..

REGARDING:  (261 million oz. of "official" U.S. gold x $1350/oz. = $0.35 trillion)  This is gold leveraged 42 to 1.  This implies that g
old could rise 42 times.  That's 42 x $1350 = $56,700/oz.
RESPONSE:  Whereas I don't mean to be rude, but do you realize that the incremental cost to produce an ounce of gold is around $350??  Thus, you feel that the "intrinsic" value of gold is about 160 times its COST to produce??????  Please, please, get some perspective and rational "thinking".

REGARDING:  If you count all the unfunded liabilities of the US government, the leverage is hundreds to one.
So, to sum up, the popular myth correctly assumes that inflation will pour into gold, and on a one to one basis.  But it incorrectly assumes that paper money is fully backed by gold, but it's not.
RESPONSE:  Who has "assumed" that our currency is backed by gold?  Do you understand the concept of "currency"?

REGARDING:  And the myth also fails to account for all the prior inflation of previous years, which will also pour into gold and silver.
Here's a bit more math that more clearly shows why the myth is wrong.
The US government's budget now exceeds $3.5 trillion, but only collects $2 trillion, and thus, is printing/creating/borrowing $1.5 trillion of new money to pay the bills.  With M3 at about $15 trillion, the money creation inflation may be said to be about 10%.
This is the true inflation, the money creation, and this is only in the US; but the rest of the world is inflating, too.  The US is regarded as about 1/4th to 1/5th of the world economy, and the rest of the world's paper money systems are not in much better shape, and often worse, so the world's paper money inflation rate can be roughly estimated at 4-5 times bigger, or perhaps $6 trillion per year.
The world annual production of gold is about 2300 tonnes, which, at 32,151oz./tonne, is 74 million ounces.  At $1350/oz., that's $100 billion dollars worth of new annual world gold production.
See the problem?  How can $6 trillion ($6000 billion) of new money annually, buy only $100 billion of new gold annually, without a massive increase in the price of gold?
Gold prices would have to rise about 60 times, just to balance out the new money creation of the world.  That implies a gold price of $81,000.
RESPONSE:  I hate saying this, but, "are you nuts?"

REGARDING:  The US budget deficit alone, the $1500 billion, is 15 times larger than the $100 billion world annual gold production.
Thus, when the pile of paper money is already so very large, then small increases in the very large pile are relatively huge to the underlying tiny gold market.
Remember there is a bit of truth about the myth, and it's that all paper money creation will flow into gold on a 1 to 1 basis, as it eventually must.  Remember, all paper money will flow into real money, since all paper money represents a potential claim on real money, and can potentially be spent on gold, and this has implications far beyond what most analysts are capable of thinking about, or writing about.
RESPONSE:  I, truly, feel empathy for you (that is, unless you realize you are spewing nonsense) and those who read your convolutions.

REGARDING:  Therefore, there is no reason to think that gold is in a bubble.  Did gold increase 15 times this year from $1000 to $15,000?  No?  Then gold has not yet "kept pace" with the inflation.
RESPONSE:  What?????????   LOL

REGARDING:  Paper money is the bubble, it's the bubble that created the housing bubble, and paper money will remain a bubble for years to come, until it all comes crashing down, and flows into gold.
RESPONSE:  Jason, paper money wasn't the cause of the RE bubble.  Mr. Alan Greenspan and the Fed stimulated the RE bubble by, precipitously, reducing interest rates in 2001.  The Fed created "funny money", which was used to bid up the prices of RE and enabled the economy to grow.

REGARDING:  The thing to remember about gold is that it is like a magnet that attracts and devours fake money.  It will draw into itself all the fake money in the entire world until the paper money fraud is extinguished from the system, and it will do this naturally, all on its own.
RESPONSE:  It is quite conceivable that there is, absolutely, no hope for you. You are so confused, it will take a good deal of work to bring you back into the realm of reality.

REGARDING:  The reason is that any fool can see the truth of the situation today, and more and more people are buying gold.  As more and more people buy gold, the gold price will continue to rise.  As more and more people see gold prices rise, even the most foolish of fools will naturally and simply follow the trend, and buy gold for the obvious gains they are seeing.
RESPONSE:  WOW!!! You do understand!!  When the "powers" believe that most of the "retail" buyers are in, the slide will commence!
All will be saying, "why didn't we see this bubble, and why didn't someone do something to mitigate it?"

REGARDING:  This is why the "powers that be" are manipulating the gold prices, trying to keep them down, or contain the rise, with a vengeance.
RESPONSE:  Jason, you are 100% backwards in your "thinking" or lack thereof.  Prices are being manipulated higher.  Think about how they got crude to rise to $147 and then dropped it to under $40 in a very, very short period.

Jason, I have attempted to offer rational responses to your "interesting" commentary.  Please read with some form of objectivity.

In late 1974, I wrote to William Simon, the then Secretary of the Treasury, and to Alan Cranston, one of California's Senators, suggesting that legalizing American ownership of gold was bad for our Nation, as it would stimulate people to invest in a metal that is non-productive and ships our wealth to South Africa and the Soviet Union.  Although, both agreed, Cranston said that it should create a few hundred jobs in the gold mining areas of California and Simon suggested that it was a "freedom" that Americans should have.

Good luck....

michael z

=====

Jason,
Your response is very, very good and well appreciated.
It was my error in "thinking" that someone who would write such nonsense would be as open to discussion as you may be.
Thus, here goes:
 
REGARDING:  The most common myth or misperception in the gold market today goes something like this:
"Since inflation rates are low, then there's no reason for gold to go up very much."
This misunderstanding is expressed in many different ways, such as:
"Since the Consumer Price Index shows only 4% inflation, then gold should go up by no more than about 4% per year."
RESPONSE:  The CPI is around 1.5%, not even close to 4%.

Jason Explains:  First, the CPI is a liar index, and does not count food, energy, or housing. 
http://www.usatoday.com/money/economy/inflation/2007-06-13-inflation-usat_N.htm
Second, my statement is an example statement, and the main point is that the entire statement is not valid, whether CPI were 1.5%, or 4%, which is not relevant.

REGARDING:  "When interest rates begin to rise, the more attractive rates will pull money out of gold and back into bonds."
RESPONSE:   That is true.  Obviously, the higher returns will attract a portion of funds from all other forms of investment.  Further, the carrying costs of holding gold will be greater.

Jason Explains:  That is true only on a gold standard.  If paper bonds pay 5%, and if gold prices are flat, clearly, gold bonds start to become more attractive to many gold holders than gold itself.  But if gold is going up 20-30% per year, or even up to 50% per year, why would gold holders sell gold to get 5%? 
 
REGARDING:  All of these statements are not true because they are only vaid when the world is on a fully backed gold standard.
RESPONSE:  What do you mean, "when the world is on a fully backed gold standard"?  LOL

Jason Explains:  Technically, the world has never had a fully backed gold standard, but it came close for over 100 years, up until 1914, people could convert paper dollars into gold at the rate of about $20/oz. in the USA, and in many parts of the civilized world.
 
REGARDING:  Instead, paper money is highly leveraged to the underlying gold.
RESPONSE:  What does that mean??  What is your "concept" of "paper money"?

Jason Explains:  Paper money is anything that is not physical gold or silver.  Paper money, in a broad view, includes all electronic deposits, wire transfers, bank debts to customers in checking and savings accounts, short term bonds, etc.
 
REGARDING:  So much so that, only in theory could the gold be used to back up paper money, and only as a last resort if paper money began to die through rejection by the people, which leads to hyperinflation.
RESPONSE:  Throwing words together without meaning is not worth too much.  Please explain your rhetoric.

Jason Explains:  I cannot explain everything in one sentence.  I try.  Explanations continue with the math below that shows the relative amounts of paper money and underlying gold.  To explain a bit further:  If the US tried to save paper money from destruction by people who wanted only gold, the goverment could offer gold at a price that would fully back all the paper money.  That price is $81,000/oz.  Clearly, at that offered price, nobody would buy it, since you can get gold from us at about $1450/oz.  The point is that such an offer at $81,000 would be valid and sold, and could back up all the paper money, and there would be no reason for gold to go higher than that, unless the government continued insolvent spending practices that led to the inflation in the first place.
 
REGARDING:  There is about $15 trillion in the US banking system, and only about $0.35 trillion worth of gold to back it up, if the gold even exists, and has not been sold or leased into the market to try to manipulate the market and contain gold's price rise in dollars.
RESPONSE:  Do you have any idea of the intrinsic value of gold.  The "price" of gold may be higher or lower than its intrinsic value.
Further, gold does not back the wealth in the U.S.

Jason Explains:  Of course I have an idea of the intrinsic value of gold, that's the main point I'm making, as it should be much higher than it is today.  Yes, indeed, the price of anything in the market may be higher or lower than the perceived intrinsic value of the item, which is why people trade based on those opinions.  I understand that gold does not back the wealth of the US, as wealth is in many forms; peace, children, roads, houses, intelligence, health, friendships, etc.  But US gold can back US paper money, an US paper money can, and ultimately will, flow into real money when trust in that paper money is lost.
 
REGARDING:  (261 million oz. of "official" U.S. gold x $1350/oz. = $0.35 trillion)  This is gold leveraged 42 to 1.  This implies that gold could rise 42 times.  That's 42 x $1350 = $56,700/oz.
RESPONSE:  Whereas I don't mean to be rude, but do you realize that the incremental cost to produce an ounce of gold is around $350??  Thus, you feel that the "intrinsic" value of gold is about 160 times its COST to produce??????  Please, please, get some perspective and rational "thinking".

Jason Explains:  I don't mean to be rude either, but I think your numbers are wrong, as I've studied the mining industry for many years.  What do you mean by "incremental cost" to produce an oz. of gold?  Do you realize that prices are made on the margin?  That means that there is some gold produced today that costs more than $1300 to produce, since not all gold miners always make money, some lose money and destroy capital for their shareholders.  That implies that the world cannot produce more gold at $350/oz. incrementally, and explains why world annual gold production is declining, and has been declining for years now.

In fact, many professionals have argued that it costs far more than $1000/oz., on average, to produce gold, because most costs are not included in "cash costs" that the miners claim in their annual reports.  They do not include the capital costs to build the mines, which can run as high as $5 billion or more.  They do not include exploration costs, acquisition costs, development costs, administration costs, promotion costs, share listing costs, litigation costs, environmental impact report costs, mine reclamation costs, etc.  All of those costs add up to far more than the "operating cash costs". 

Furthermore, your reasoning is flawed.  If you mean to imply that things should cost no more than production cost, then you are making my case for me that paper money is fraud.  According to your theory of value, a $100 bill should be worth no more than the 4 cents that it takes to print one up.  That's 2500 times more than it's COST to produce, but you don't seem to have a problem with that, but you have a problem with gold being valued 80 times more than it's cost to produce?  How is it that your thinking an example of perspective and rational thinking, but somehow, mine is not? 
 
REGARDING:  If you count all the unfunded liabilities of the US government, the leverage is hundreds to one.
So, to sum up, the popular myth correctly assumes that inflation will pour into gold, and on a one to one basis.  But it incorrectly assumes that paper money is fully backed by gold, but it's not.
RESPONSE:  Who has "assumed" that our currency is backed by gold?  Do you understand the concept of "currency"?

Jason Explains:  All pundits who assume that gold prices should gain no more in an annual percentage, no more than the current inflation rate, are making the underlying assumption that all of our currency is 100% backed by gold, because that's the only situation in which that kind of analysis would be valid.  But nobody actually believes that today, which is why their analysis is wrong.  Yes, I understand the concept of currency that's when a thing is used as a current medium of exchange.  Money is also a store of value, and a unit of account, and a source of anonymous wealth, and many other things.
 
REGARDING:  And the myth also fails to account for all the prior inflation of previous years, which will also pour into gold and silver.
Here's a bit more math that more clearly shows why the myth is wrong.
The US government's budget now exceeds $3.5 trillion, but only collects $2 trillion, and thus, is printing/creating/borrowing $1.5 trillion of new money to pay the bills.  With M3 at about $15 trillion, the money creation inflation may be said to be about 10%.
This is the true inflation, the money creation, and this is only in the US; but the rest of the world is inflating, too.  The US is regarded as about 1/4th to 1/5th of the world economy, and the rest of the world's paper money systems are not in much better shape, and often worse, so the world's paper money inflation rate can be roughly estimated at 4-5 times bigger, or perhaps $6 trillion per year.
The world annual production of gold is about 2300 tonnes, which, at 32,151oz./tonne, is 74 million ounces.  At $1350/oz., that's $100 billion dollars worth of new annual world gold production.
See the problem?  How can $6 trillion ($6000 billion) of new money annually, buy only $100 billion of new gold annually, without a massive increase in the price of gold?
Gold prices would have to rise about 60 times, just to balance out the new money creation of the world.  That implies a gold price of $81,000.
RESPONSE:  I hate saying this, but, "are you nuts?"

Jason Explains.  No.  Again, insults become valid if they are accompanied by reason.  I fail to see much of it in your responses so far.
 
REGARDING:  The US budget deficit alone, the $1500 billion, is 15 times larger than the $100 billion world annual gold production.
Thus, when the pile of paper money is already so very large, then small increases in the very large pile are relatively huge to the underlying tiny gold market.
Remember there is a bit of truth about the myth, and it's that all paper money creation will flow into gold on a 1 to 1 basis, as it eventually must.  Remember, all paper money will flow into real money, since all paper money represents a potential claim on real money, and can potentially be spent on gold, and this has implications far beyond what most analysts are capable of thinking about, or writing about.
RESPONSE:  I, truly, feel empathy for you (that is, unless you realize you are spewing nonsense) and those who read your convolutions.

Jason Explains:  Again, I see no reason in your comments.
 
REGARDING:  Therefore, there is no reason to think that gold is in a bubble.  Did gold increase 15 times this year from $1000 to $15,000?  No?  Then gold has not yet "kept pace" with the inflation.
RESPONSE:  What?????????   LOL

Jason Explains:  Again, I see no reason in your comments.

REGARDING:  Paper money is the bubble, it's the bubble that created the housing bubble, and paper money will remain a bubble for years to come, until it all comes crashing down, and flows into gold.
RESPONSE:  Jason, paper money wasn't the cause of the RE bubble.  Mr. Alan Greenspan and the Fed stimulated the RE bubble by, precipitously, reducing interest rates in 2001.  The Fed created "funny money", which was used to bid up the prices of RE and enabled the economy to grow.

Jason Explains:  Ah, you are technically correct.  I'm painting the picture here with broad strokes when I say that paper money is the cause, as clearly, it's the easy money from lending that is more technically correct cause.  But that kind of easy lending only takes place when there is paper money, it does not take place if the lenders had to part with physical gold.  So, in a greater sense, I'm more techically correct. 
 
REGARDING:  The thing to remember about gold is that it is like a magnet that attracts and devours fake money.  It will draw into itself all the fake money in the entire world until the paper money fraud is extinguished from the system, and it will do this naturally, all on its own.
RESPONSE:  It is quite conceivable that there is, absolutely, no hope for you. You are so confused, it will take a good deal of work to bring you back into the realm of reality.

Jason Explains:  If I'm confusesd, you don't give me any reasons why.  I'm merely providing a visual example of how gold can act, whether you appreciate the example of gold as a magnet for paper money, well, that's up to your ability to perceive the reality of the historical failures of paper money.
 
REGARDING:  The reason is that any fool can see the truth of the situation today, and more and more people are buying gold.  As more and more people buy gold, the gold price will continue to rise.  As more and more people see gold prices rise, even the most foolish of fools will naturally and simply follow the trend, and buy gold for the obvious gains they are seeing.
RESPONSE:  WOW!!! You do understand!!  When the "powers" believe that most of the "retail" buyers are in, the slide will commence!
All will be saying, "why didn't we see this bubble, and why didn't someone do something to mitigate it?"

Jason Explains:  Gold will be in a bubble when you can get a government backed loan, based on unverified income reports, to buy options on gold to help participate in the American Dream of leveraged gold ownership.  Gold will be in a bubble when the government buys more than all the gold produced in the USA at the top of the market, and makes coins with all of it, and issues those coins at a value that is 5-10 times higher than the real cost to buy that gold.  Gold will be in a bubble when the government will buy 10 oz. of "raw" .999 fine gold from a refiner with one "official" gold coin that contains only 1 oz. of gold.  Gold will be in a bubble when the government fails to print value on paper, and resorts to printing value on gold.  It's called Seigniorage.  Look it up.  http://en.wikipedia.org/wiki/Seigniorage
 
REGARDING:  This is why the "powers that be" are manipulating the gold prices, trying to keep them down, or contain the rise, with a vengeance.
RESPONSE:  Jason, you are 100% backwards in your "thinking" or lack thereof.  Prices are being manipulated higher.  Think about how they got crude to rise to $147 and then dropped it to under $40 in a very, very short period.

Jason Explains:  I agree that oil is overvalued, especially compared to gold, even at $40/barrel, but oil is now $80/barrel.  At $40, the world produces $1.2 trillion of oil per year, and at $1350/oz., the world produces $100 billion of gold.  To me, that shows the intrinsic value of gold is very undervalued, and that these prices are only sustainable as long as the world, particularly the oil producers, continue to trust paper money.

See http://silverstockreport.com/2009/oil-not-money.html
 
Jason, I have attempted to offer rational responses to your "interesting" commentary.  Please read with some form of objectivity.

Jason Retorts:  I see you have attempted.  I see you have failed.  Thank you for the attempt.  I think it shows who is objective and rational very well.
 
In late 1974, I wrote to William Simon, the then Secretary of the Treasury, and to Alan Cranston, one of California's Senators, suggesting that legalizing American ownership of gold was bad for our Nation, as it would stimulate people to invest in a metal that is non-productive and ships our wealth to South Africa and the Soviet Union.  Although, both agreed, Cranston said that it should create a few hundred jobs in the gold mining areas of California and Simon suggested that it was a "freedom" that Americans should have.

Jason Explains:  I understand that many people do not understand the productivity of gold, nor do they respect or understand the productivity of free market prices that are not the result of government distortions.  Please feel free to educate yourself as to why gold is so productive, and not a "dead" asset.  In sum, gold keeps men honest.  Honesty is good.  If you think honesty is bad, I'm sorry, I cannot help you.   

http://silverstockreport.com/2009/gold-is-good.html
 
Good luck....
 
michael z

=====

Other readers instantly appreciated my letter.

 
=====  My responses are below, in bold italics. =====

Jason,
 
Thank you for addressing a few of the major objections to the metals bull market in your most recent report. I think though that there are three OTHER objections to the metal bull market that you need to respond to- because I am hearing these objections more and more all the time. The first argument goes somthing like this:
 
"The indebtedness of the people and the very high unemployment PREVENT the metals bull market from growing much larger and or at an increased rate."

Jason Responds:  50% of the people are always in debt, or have no money.  But it only would take 1% of the wealth of paper money to flow into silver in a year in order for silver prices to exceed about $300/oz.  Remember, the other 50% have plenty of wealth, on average, it's about $150,000!  And the top 1% of wealth holders have over 25% of the wealth of the USA.

As for the unemployed, they are maybe only 20% of the population.  The other 80% are employed, or are investors, living off of savings or investments.  There are still probably about 3 million millionaires in the USA, and perhaps over 150,000 people who have over $30 million net worth.  Poor people almost never drive markets, except that they recently drove up the housing market as lenders went crazy lending to people who had nothing.
 
That is to say that as the US faces stagflation and deflation in some business sectors the investment capital that can go into the metals should hit a wall and fall off. This also can be seen as a possible catalyst for a pull back in what skeptics see as a metals bubble.

Jason Responds.  Yes, investment capital can "hit a wall".  But not when only 2% of 1% of paper money is flowing into silver, it's not yet even taken off yet! 
 
The second argument as to what the metals are possible in a bubble usually goes like this:
 
The US government is in such high debt and trade deficit that new spending will have to decrease greatly in the future if not come to a dead stop all together. This in theory would reduce inflation and or bring about real deflation. In this case it is the inflated indebtedness of the nation that actually starts a deflationary period through higher taxes less spending etc- which could bring skepticism to the metals and burst their upward trend. This theory in the extreme says that the spending game comes to an end and we hit a depressionary scenario.

Jason Responds.  So far, deflation only takes place in the USA when there are bank failures, and only when the banks are not bailed out.  But bail outs are inflationary.  And why do they bail?  Because if they do not, then people will not trust banks, and people will turn to the only asset that does not depend on bailouts, which is gold and silver.  They bail out to prevent people from buying gold! 

Furthermore, all government activity is, by nature, non free market, and thus, by nature, not rational, and thus, by nature, a form of theft.  As theft is reduced, the economy will flourish.  The economy does not need more theft to prosper, that's totally backwards.
 
The last objection I am hearing all the time is that metals prices actually DO NOT directly corrolate with the rate of inflation.
 
The evidence that skeptics use to support this theory is that metals prices through the 80s and 90s went down in value relative to the Dow despite increased inflation- thus the reason for this was that interest rates were at an all tme low (like they are now) and the budget spending was being ballanced with also a higher tax rate- before the Bush tax cuts. This theory seems in imply from historical data that the metals prices are only a hedge against a fearful un predictible market. Which is perhaps why they piked in the early 80s and not again through the 2000s (albiet this time the bull market has been more gradual and consistent). In this scenario the devil's advocate might say that inflation can be a sign of increased wealth and quality of life in that it reflects economic growth- since (as the argument goes) inflation through the 90s kept the economy growing strong, made many millionaires, increased the quality of life for most people, and kept the price of metals low.

Jason Responds.  It seems people have forgotten the history of the 1980's.  In 1980, several things changed to stop the bull market in gold.  Income taxes were reduced from about 77% under Carter to about 35% under Reagan.  That made business attractive again, so capital did not need to remain "on strike" by being parked in gold.  Second, interest rates went to near 20%, and over 20% for private loans.  Third, you could buy gold on leverage with futures contracts which also helped to divert demand away from physical.  Higher taxes will not stop the bull market in gold, they will accelerate it.  Higher interest rates may help to stop gold, but interest rates need to go higher than gold is going up, or higher than about 30% today!
 
I hear these objections being raised all the time. I take them all into consideration but I am not convinced by any of them. Let me know what you think and if you can adress them- as they represent questions on the minds of many interested investors.
 
Truly,
 
Ed

=====

Hey Jason,

The world annual production of gold is about 2300 tonnes, which, at 32,151oz./tonne, is 74 million ounces.  At $1350/oz., that's $100 billion dollars worth of new annual world gold production.

See the problem?  How can $6 trillion ($6000 billion) of new money annually, buy only $100 billion of new gold annually, without a massive increase in the price of gold?

Gold prices would have to rise about 60 times, just to balance out the new money creation of the world.  That implies a gold price of $81,000.

    Writings similar to the above;  = my respect for you - - - By no stretch of the imagination am I saying I have no respect for the David Morgans or Ted Butlers (Certainly I respect all the work / research they contribute to making people aware of Au. /Ag. potential) however, I have on so many occasions read your articles and after reading many of your articles I'll say to myself: This guy has Ba11$ !!!! He is not afraid to write; "That implies a gold price of $81,000". I get so tired of hearing the likes of Tom Keene so arrogantly and in a matter of fact tone say, "Just as 1980 taught us, all good things come to an end which is exactly what will happen with a repeat of gold and silver (1980) - - - People like Keene eat their words every time there is a small correction/manipulation by quickly and incorrectly crying it's over for Au./Ag. which has always turned on them with a marginal upside tick - - - I guess there is no shame in the lives of Wall Street's die hards - - -   You never seem to be afraid to point out the obvious and I hope you never quit based on worry of placing your name on the line. NUMBERS don't lie - - - Your research of the market brings out these numbers. NUMBERS of the gov. have proved themselves "TWEAKED"  so let those who choose to see, see !!! The gov. has succeeded in creating an illusion that many Americans feel comfortable with  (so comfortable that many would prefer to buy paper Au./Ag. as opposed to physical Au./Ag.) after all, the gov. won't let anything bad happen with their gold / silver contracts purchased....(go figure). Many cannot understand life without frn's. Keep showing them. Never quit

 The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw

=====

I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can.  The fundamentals indicate rising prices for decades to come.

Our Coin Shops are open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends.

JH MINT & Coin Shop, Grass Valley, CA -- minimum $2000 order for free shipping, USA shipping only.
Kerri: (530) 273-8822
kerri.jhmint@yahoo.com 
(530) 273-8175
www.jhmint.com

See also my Mom's Silver Shop in Sacramento, CA
www.momssilvershop.com
3510 Auburn Blvd., #12
Sacramento, CA 95821
(916) 481 5656
(Mom will ship with no minimum order size, and overseas, and take credit cards and paypal.)

Sincerely,

Jason Hommel
In case you miss an email, check the archives (scroll down) at  www.silverstockreport.com  
For the Biblical case for the benefits of using honest money, see  www.bibleprophesy.org 
 

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Today: Low Infltion = Massive Gold Rise!

(Gold is on Sale at the JH MINT!)

Silver Stock Report

by Jason Hommel, October 17th, 2010

The most common myth or misperception in the gold market today goes something like this:

"Since inflation rates are low, then there's no reason for gold to go up very much."

This misunderstanding is expressed in many different ways, such as:

"Since the Consumer Price Index shows only 4% inflation, then gold should go up by no more than about 4% per year."

or

"Since M1 is showing only moderate inflation, or deflation, then gold prices are due for a moderate gain, or even a fall."

or

"Since inflation expectations are moderate, and interest rates on bonds are low, then gold's outsized gains are unsustainable, and thus in a bubble."

or

"When interest rates begin to rise, the more attractive rates will pull money out of gold and back into bonds."

All of these statements are not true because they are only vaid when the world is on a fully backed gold standard.

But we are not on a gold standard!

Instead, paper money is highly leveraged to the underlying gold.  So much so that, only in theory could the gold be used to back up paper money, and only as a last resort if paper money began to die through rejection by the people, which leads to hyperinflation.

There is about $15 trillion in the US banking system, and only about $0.35 trillion worth of gold to back it up, if the gold even exists, and has not been sold or leased into the market to try to manipulate the market and contain gold's price rise in dollars.

(261 million oz. of "official" U.S. gold x $1350/oz. = $0.35 trillion)  This is gold leveraged 42 to 1.  This implies that gold could rise 42 times.  That's 42 x $1350 = $56,700/oz.

If you count all the unfunded liabilities of the US government, the leverage is hundreds to one.

So, to sum up, the popular myth correctly assumes that inflation will pour into gold, and on a one to one basis.  But it incorrectly assumes that paper money is fully backed by gold, but it's not.  And the myth also fails to account for all the prior inflation of previous years, which will also pour into gold and silver.

Here's a bit more math that more clearly shows why the myth is wrong.

The US government's budget now exceeds $3.5 trillion, but only collects $2 trillion, and thus, is printing/creating/borrowing $1.5 trillion of new money to pay the bills.  With M3 at about $15 trillion, the money creation inflation may be said to be about 10%.

This is the true inflation, the money creation, and this is only in the US; but the rest of the world is inflating, too.  The US is regarded as about 1/4th to 1/5th of the world economy, and the rest of the world's paper money systems are not in much better shape, and often worse, so the world's paper money inflation rate can be roughly estimated at 4-5 times bigger, or perhaps $6 trillion per year.

The world annual production of gold is about 2300 tonnes, which, at 32,151oz./tonne, is 74 million ounces.  At $1350/oz., that's $100 billion dollars worth of new annual world gold production.

See the problem?  How can $6 trillion ($6000 billion) of new money annually, buy only $100 billion of new gold annually, without a massive increase in the price of gold?

Gold prices would have to rise about 60 times, just to balance out the new money creation of the world.  That implies a gold price of $81,000.

The US budget deficit alone, the $1500 billion, is 15 times larger than the $100 billion world annual gold production.

Thus, when the pile of paper money is already so very large, then small increases in the very large pile are relatively huge to the underlying tiny gold market.

Remember there is a bit of truth about the myth, and it's that all paper money creation will flow into gold on a 1 to 1 basis, as it eventually must.  Remember, all paper money will flow into real money, since all paper money represents a potential claim on real money, and can potentially be spent on gold, and this has implications far beyond what most analysts are capable of thinking about, or writing about.

The 10% annual inflation of the US money supply today, which is $1.5 trillion can, alone, cause gold to rise 15 times, up 1,400% to over $20,000/oz!

Therefore, there is no reason to think that gold is in a bubble.  Did gold increase 15 times this year from $1000 to $15,000?  No?  Then gold has not yet "kept pace" with the inflation.  Paper money is the bubble, it's the bubble that created the housing bubble, and paper money will remain a bubble for years to come, until it all comes crashing down, and flows into gold.

The thing to remember about gold is that it is like a magnet that attracts and devours fake money.  It will draw into itself all the fake money in the entire world until the paper money fraud is extinguished from the system, and it will do this naturally, all on its own.

The reason is that any fool can see the truth of the situation today, and more and more people are buying gold.  As more and more people buy gold, the gold price will continue to rise.  As more and more people see gold prices rise, even the most foolish of fools will naturally and simply follow the trend, and buy gold for the obvious gains they are seeing.

This is why the "powers that be" are manipulating the gold prices, trying to keep them down, or contain the rise, with a vengeance.  This is why there are so many forms of paper gold to buy that don't require real delivery, such as leveraged programs, certificate programs, storage programs, IRA programs, futures contracts, options on futures contracts, ETF's, futures on ETF prices, options on ETFs, etc.  All such forms of paper gold are merely tricks designed to prevent people from buying real gold, which prevents gold's real price from going up, which keeps the paper money fraud going.

After all, as gold rises a mere 30% per year, as it has been done over the last year, and an average of about 20% per year for the last ten years, it's far more attractive than most other investments.  But furthermore, as I've shown you, the real potential is for gold to go up by 15 times, when US paper money is inflated by a mere 10% per year.

And what happens if things continue as they are for the next 15 years?  With paper money inflation at 10%, and with silver increasing at 30%?

If inflation of paper money continues at 10% per year, for 15 years, the $15 trillion in the US banking system grows to $63 trillion, having grown about $6 trillion in the final year!

See for yourself at http://www.smartmoney.com/compoundcalc/

That shows that on a large pile of money, 10% growth is clearly unsustainable!

And what happens when silver continues to gain 30% per year for the next 15 years?

The annual silver production market today is $15 billion.  So that grows to $768 billion, which is still a very managable, small, and realistic figure, with plenty of room to continue to grow in a world with $63 trillion to spend!

This shows that on a small pile of money, 30% annual growth is very realistic and sustainable for 15 years.

=====

Gold on Sale!

We lowered prices once again!  And we are now publishing our "buy back" prices.

We at the JH MINT have "too much" gold.  I'd rather have the bulkier silver, as I like silver better.  This last week, as silver prices rose faster than gold, as the ratio changed from 58 to 56, we "lost" 2 ounces of silver value for every 1 oz. of gold we have on hand.  Unfortunately, we had 257 ounces of gold in inventory, and so, we lost the equivalent wealth of twice that in silver ounces, when we count inventory as "ounces of silver", so we lost value of 514 ounces of silver, which, at $24.34/oz. is a loss of $12,510 for the week due to holding gold, rather than silver! 

Thus, all of our gold is now on sale compared to last week, until our gold assets come down to a more managable and more appropriate size of about 175 to 200 oz. 

My actions reflect my belief that silver's gains will outpace gold's gains.

If you agree with me, then please consider buying our silver.  We'll replace it with more silver, by buying in bulk from wholesalers, refiners, mints, or the public.

Compare our prices to ebay: 
(sometimes we are higher, sometimes we are lower, but always competitive and fair, with extremely FAST and reliable shipping.)

$2569 Silver 100 oz. bar at JH MINT, 62 bars available, nearly $100 to 250/bar cheaper!

http://www.google.com/#sclient=psy&hl=en&q=ebay+100+oz.+silver+bar&aq=f&aqi=&aql=&oq=&gs_rfai=&pbx=1&fp=6b353df19b06cafa
Engelhard 100oz. Silver Bar - We Ship Global
$2,724.00 used - eBay
Silver 100oz Bar Engelhard Only
$2,827.50 used - eBay
100 Oz Johnson Matthey Jm Silver Bar 0.999 Fine Bullion
$2,695.00 used - eBay

Or, please consider buying our discounted gold.

Compare our prices to ebay: nearly $300/oz. cheaper!
$1464.79   1 oz. American Eagle at JH MINT, 45 coins available

2010 American Gold Eagle G$50 1 Oz Collector Coin
$1,745.32 used - eBay
http://cgi.ebay.com/2010-American-Gold-Eagle-G-50-1-oz-Collector-Coin-/280565951974?pt=LH_DefaultDomain_0&hash=item415308ade6#ht_3947wt_1139

Compare our price on a Corona to ebay; nearly $200/oz. cheaper!
$1410 .98 oz. gold Corona 

Our Gold Coronas are for sale at a mere 3% over spot!  Compare to ebay:

AUSTRIA -1915 - 100 CORONA- GOLD COIN !!!!
US $1,599.99
http://cgi.ebay.com/AUSTRIA-1915-100-CORONA-GOLD-COIN-/260674877428?pt=LH_DefaultDomain_0&hash=item3cb16ef7f4#ht_786wt_905

=====

I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can.  The fundamentals indicate rising prices for decades to come.

Our Coin Shops are open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends.

JH MINT & Coin Shop, Grass Valley, CA -- minimum $2000 order for free shipping, USA shipping only.
Kerri: (530) 273-8822
kerri.jhmint@yahoo.com  
(530) 273-8175
www.jhmint.com

See also my Mom's Silver Shop in Sacramento, CA
www.momssilvershop.com
3510 Auburn Blvd., #12
Sacramento, CA 95821
(916) 481 5656
(Mom will ship with no minimum order size, and overseas, and take credit cards and paypal.)



Sincerely, 

Jason Hommel 
In case you miss an email, check the archives (scroll down) at  www.silverstockreport.com  
For the Biblical case for the benefits of using honest money, see  www.bibleprophesy.org  

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