The Other Side of the Story

Despite the assurances and prognostications of congressional and media defeatocrats the Iraqi quagmire simply refuses to materialize. For all the doom and gloom reported in our melancholy media, there is so much going on in Iraq that's cause for rejoicing that it seems the media must deliberately close their eyes to avoid seeing it. Why they don't report this stuff I'll leave to you to decide, but if you're eager for good news coming out of Iraq go here.

Be advised that there's so much good news that you'll probably not be able to finish it all in one sitting.

More On Silver

Brother Dick contacted me with some questions about my previous post on silver, and I quickly realized that I was remiss by not mentioning several important points, so I'll include them here as an addendum to the post.

Since the value of original silver coins (those coins once used as currency) is so much greater than the face value of the coin, they are no longer used as currency. Their value is in their content. Similarly, newer silver coins are simply bullion stamped in coin form. They might as well be bars. Just like gold Krugerrands, American Eagles, Canadian Maple Leafs, etc. their value is determined by the amount of silver content with no real face value per se.

You can still acquire pre-1964 silver coins, in the form of "bags" of coins. For instance, a bag of 90% silver coins with a $1,000 face value which represents 715 ounces of pure silver goes for about $7,750 (about $10.85 per ounce of silver). It's an interesting play.

Some silver coins have numismatic value and if there's a real crunch in the supply of silver, they might be melted down for the silver content.

Numismatic coins are graded to classify their condition. The grading of the coin is then factored into the quantity of coins minted in that year. The result is a value placed on the coin. These coins are encased in a clear plastic case that protects them and displays information about the grade of the coin.

This brings up an interesting question I've had for a long time regarding gold and silver numismatic coins. If many of them are sold and get melted down to meet demand, I would suspect that those coins that remain would absolutely skyrocket in value as they would then be that much more rare.

Regarding shares in mining companies it's important to note that they carry inherent risks. Mining disasters, unfriendly governments deciding to nationalize the mines, increased energy costs cutting into profits all of which are hazards that are reflected in the value of a share of stock. These issues explain why shares offer leverage to the price of the metal. Nothing is safer than the metal "in hand" and that's why I believe that the first order of business is to acquire a stash of the metal. It doesn't pay interest or dividends but it's safe. Then one can venture into the world of shares of mining companies.

A silver Electronically Traded Fund (ETF) has just been given approval to go into operation. For them to open their doors for business they will have to acquire somewhere in the neighborhood of 130 million ounces of silver. They operate by selling shares which are backed by the silver they have. As more people buy shares, the ETF has to acquire more silver to back the new shares. This impacts supply of the metal. All of this creates less supply in the open market because the ETF is taking the metal off the table.

Lastly, the price of both silver and gold is largely set according to the futures market. This has enabled the paper markets to significantly influence the price of the metals. In other words, by manipulating the futures market, the price of the metals have been suppressed. One has to realize that those who benefit from a program of fiat currency must maintain an environment of confidence in the fiat currency and part of doing so is to maintain low prices of the assets (the barometer) that historically indicate inflation and devaluation of the fiat dollars. That metal's prices, and commodities in general, have been in a bull market for several years now and this indicates that they are losing control. As more and more people (governments and individuals alike) begin to question the "full faith and credit" of the U.S. dollars, they will transition into the ultimate form of money. Eventually the laws of supply and demand come into play as they will not be conned and that is what has been happening over the last 5 years.

Any major political event would destabilize the whole game and prices would increase dramatically, otherwise it will just be a relatively slow grind upwards as more and more individuals (and governments) flee to the metal. Personally, I suspect investors in precious metals will benefit from either scenario.

Annex Mexico

Michelle Malkin has links and updates on the Latino Reconquista sweeping across America. These protests seem to be about more than just enabling immigrants to make a living in the U.S. Demands that we not enforce the law on immigration are tantamount to demanding that we eliminate the border with Mexico and essentially allow the American southwest to return to its early 19th century status as a Mexican territory.

Once millions of Mexicans have established themselves as citizens it will not be long before they control state legislatures in Arizona, Texas, New Mexico and California. Once they do, those states, or at least some of them, will become de facto territories of the state of Mexico. Our government leaders, both Republican and Democrat, have failed to control our border and now we are confronted with an enormous problem not unlike what Europe is faced with by their immigrant Muslim population.

We have two suggestions. The first is that we immediately begin construction of a barrier along the entire length of the southern border to keep illegals out, and then proceed to deport any illegal Mexicans caught breaking American laws or who don't have a job. The barrier is an essential first step. Without it anything else we do to prevent the cultural transformation of our country will be like bailing water on the Titanic.

The second suggestion is that if we choose not to follow the first suggestion, then, since so many Mexicans wish to be Americans, and since so many politicians believe we can do nothing to stem the flow of immigrants across our border, and since an open border is equivalent to no border at all, we should annex the entire country of Mexico and make it the fifty-first state. This wouldn't make everybody happy, of course, but it would make the economic burden of illegal immigration easier to bear. All Mexicans would be instant citizens and eligible for all the benefits to which citizens are entitled, including welfare, social security and minimum wage.

Meanwhile, the U.S. could nationalize the Mexican oil, mineral, and tourist industries, which are cash cows whose riches are currently being siphoned to a wealthy few oligarchs, and use the profits and taxes from those revenue sources to help pay the cost of absorbing millions of new citizens into the United States. If we're going to allow Mexico to overwhelm the U.S. with its tide of humanity yearning to be free, we at least ought to make them pay for it.

Some Mexicans would object, no doubt, at being forced to become American citizens, and some may even resist, but maybe not. It's worth a try. Seriously. After all, either Mexico becomes American or the American southwest, within a decade or two, becomes Mexican.

Ending Poverty

Charles Murray, as is his custom, has come up with an intriguing idea that is bound to be controversial. He proposes giving every person in the U.S. a grant of $10,000 every year. The advantages, he thinks, far outweigh the disadvantages.

Unlike the proposal floated by George McGovern, who campaigned for the presidency in 1972 on the promise of giving every American $1000, Murray's proposal is not exactly a giveaway. He outlines his argument at Opinion Journal. It's worth a close reading.