Greeks Rush to Gold

Courtesy of EconomicPolicyJournal:

In an effort to protect themselves from from the collapse of their banks and government, Greeks are rushing to the only money that governments can't mess with, gold.

Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and runs on the country’s banks, FT reports.


Sales of gold coins have soared as savers seek a safer and fungible source of value. “When the global financial crisis started, our sales of coins to investors overtook bullion for the first time,” said Harry Krinakis, at Sepheriades, a Greek precious metals trader. “Now the sales ratio has reached five to one.”


Monthly bank withdrawals were running at €1.5bn-€2bn ($2.2bn-$2.9bn) in the first quarter. Last year, depositors withdrew €30bn from Greek banks, equivalent to 12.3 per cent of total savings, according to the Greek central bank.

Take notes, this could be the U.S. down the road.

Kitco Hit With Tax Fraud - Shut Down For Now

Courtesy of Financial Post:

Montreal – Revenu Quebec has initiated a massive series of searches and seizures in the Montreal area, alleging that companies and individuals in the gold refining and trading industry engaged in widespread tax fraud on transactions worth $1.8-billion.

More than 175 government investigators conducted the sweep this week, targeting businesses, residences, accountant offices and bankruptcy trustees. Some 125 companies are complicit in the scheme that bilked the government of more than $150-million worth of taxes, Revenu Quebec asserts. No arrests have so far been announced.

The tax department has named only two companies publicly as being the subject of its investigations – Kitco Metals Inc. and Carmen International Inc. Privately-held Kitco, one of the largest retailers of precious metals in the world, denies the allegations against it.


The crackdown marks another major fraud concern for corporate Canada. It comes as the Ontario Securities Commission probes the activities of Sino-Forest Corp., the Toronto Stock Exchange-listed company whose operations in China came under intense scrutiny last week when a report claimed that its assets and revenues had been vastly overstated.

“Revenu Quebec has a duty to be intransigent with those who contravene financial rules and can begin legal proceedings against them,” the department said in a statement. The maximum prison term for anyone found guilty in relation to tax evasion is five years, it said.

Two separate networks of individuals and companies are at the heart of the false-billing scheme, Revenu Quebec said. The six-step fraud involved companies using artificial transactions to obtain refunds of taxes that were never actually paid as gold was turned into scrap and then refined back into its pure state.
“Contrary to Revenu Quebec’s allegations in a press release published [Thursday], Kitco Metals Inc. has never participated in any tax fraud, nor has it ever carried out any fictitious transactions,” the company said in a statement released late Thursday. “In all respects Kitco vigorously contests all aspects of Revenue Quebec’s investigation.”

The company won court approval to appoint an interim receiver, RSM Richter, to help it deal with the allegations. Its daily operations are continuing as they normally do, said company spokesperson Sharlene Dozois.

“[We appointed the receiver] to protect the interest of everyone and have someone work with us through the process,” Ms. Dozois said. “We did that voluntarily.”
Founded in 1977, Kitco is a well-known retailer of precious metals and it also supplies refining services. The company’s 200 employees buy and sell a wide range of precious metal products in gold, silver, platinum, palladium and rhodium from offices in Montreal, New York, Hong Kong and Shanghai. Its website, which carries live spot prices and expert market commentary, claims to attract nearly 1 million visits daily.
Addressing the allegations directly, Kitco says it is being held “unjustly” responsible for the actions of its suppliers.

The company explained in a statement that it buys precious metals scrap and pays its suppliers sales taxes on these purchases for which it receives a tax credit. “It is the responsibility of these suppliers to pay back the sales taxes to Revenu Quebec.

[The ministry] alleges that some of these suppliers have not remitted the taxes paid to them. Revenu Quebec is unjustly holding Kitco responsible for the unremitted taxes, which led to the issuance of the tax assessments.”
Revenue Quebec regularly conducts investigations into alleged fraud and tax evasion. But rarely do the results of the investigations result in sweeps of this size.

In addition to the two companies named, the department named five individuals it believes were involved in producing fake bills related to false tax declaration.

They are Viken Gebenlian, Haroutioun Dakessian, Oskan Hazarabedian, Benjamin Bensimon and Shadia Khatib. No further information was given about the individuals.

Silver Correction - Still on the Way

This recent move up should not be considered the ride to the top everyone is waiting for. This movement over the days of May 23 - May 25th is just a buying spree for those that are tired of waiting and are taking advantage of Silver's cheap price.

Silver has yet to correct and that move down from 49 to 33 was and should not be considered a correction. It was simply manipulation by the biggest players to get out of their shorts position. Be wary of this up move, as they love to use moves like this to take profits at the benefit of the man on the street. The big 10 love to make it move up 5 or ten dollars then take their profits, whereby the average person unaware of the antics of these 10 big houses panic and sell. I've seen it over and over again.

Most of my colleagues and I agree that there is resistance at the 4o dollar level and we'll see Silver correct some time in June or July and it may test a new bottom in the mid 20's. Larry Edelson over at Uncommon Wisdom is a very smart player in the investing and metals field with over 30 years on the job and here is what Larry has to say about Silver.

Keep your eyes on the $1,477 level in gold as important support. If it gives way, expect to see a pullback to $1,425. On the resistance side, gold will find some selling between $1,525 and $1,545.

In silver, major support lies at $32. I expect that to soon give way, leading to a decline to $30, then $28 and quite possibly $23. Resistance lies at the $39 to $40 level.

On May 24th Dan over at Trader Dan's Market Views had this to say.

Silver pushed past resistance at the top of its narrow range which came in near $36. It ran higher in very early Asian trade but has not been able to extend its gains and push beyond $37. It has a band of overhead resistance near $37.50 that will be formidable and will need to give way if it is going to make a push towards $40.

At the end of the day of the 25th it had pushed just over $38 and seems to be heading up, but I warn you to beware of the traps set by the big boys. They just want you to jump in and make their paper worth more, before they pull out and take the money.

The recent drop in early May was caused by a 1,000 tonne sale that came out of the blue and yes, it was paper, not physical. There are some traders now worried about the vast amount of paper Silver, billions of dollars a week, being traded with nothing to back it up, save more paper.

In some cases, as much as $70 Billion a day is traded by China alone, and there isn't a pennies worth of physical to back the trade, it's simply manipulation to make their huge investment in physical worth more.

Keep your eye on the ball and watch for that correction in June or July. The market is way over bought, meaning there are tonnes and tonnes of Silver on paper and soon it'll be sold to take the profit. When it happens, back up your truck and load up, because Silver will be on the launching pad, fueled up and ready to go to the moon.

Industry Expert...We're Plain Running Out of Silver

Here is an excerpt of an interview with Jeff Clark at Casey Research and Andy Schectman of Miles Franklin.

Jeff: You made some interesting comments to me about supply and premiums. Tell us what you’re hearing and seeing in the bullion market right now.

Andy: I feel as though I'm the boy who cries wolf or that I've been beating the same drum for too long. But in reality, it has been my feeling since late 2007 that ultimately this market will be defined less by the price going parabolic – which I think ultimately will happen – and more by a lack of supply. You see occasional reports that state it’s just a lack of refined silver or lack of silver in investable form. But as far as I'm concerned, there is a major supply deficit issue, and it’s getting worse.

Take the U.S. Mint, for example. Right now, as we talk, you can barely get silver Eagles. We’re seeing delivery delays of three to four weeks, and premium hikes of a dollar or more in the last three weeks. Most of the suppliers in the country are reluctant to take large orders on silver Eagles because they don’t know (a) when they’ll get them, and (b) what the premiums will be when they arrive.

I was talking to the head of Prudential Bache and asked him about silver Eagles. He said, "You know, as soon as the allocations come in, they’re sold out. We can't keep them in." This is coming from one of the largest distributors of U.S. Mint products in the country.

And this is all occurring in an environment that has only minimal participation by the masses. Few people in this country have ever even held a gold or silver coin. So, if it's this difficult to get bullion now, what's it going to be like when it becomes evident to the masses they need to buy? This is what keeps me up at night.

Jeff: Some analysts say it's a bottleneck issue, that the mints have enough stock but just need more time or more workers to fabricate the metal into the bars and coins customers want.

Andy: No, I don’t believe that. What business do you know that if they had that much profit potential wouldn’t increase production and hire more workers to meet demand? To me, the “inefficient model” argument is an excuse.

Look at what the U.S. Mint alone has done: they haven’t made the platinum Eagle since 2008. They make maybe one-tenth as many gold Buffalos as they do gold Eagles. They’ve made hardly any fractional-ounce gold Eagles. Heck, they can’t even keep up with the demand for the products they do offer. Does that sound like a bottleneck to you? Or is it because there is far more demand than there is available supply? It’s pretty clear to me it’s the latter.

Jeff: What are you seeing in the secondary market; are investors selling bullion?

Andy: There is no secondary market. Absolutely none. Nobody is selling back anything, at least not to us. Think about that: if this was a traditional investment and your portfolio went up 100% in the last year, like silver has, you’d think some investors would take some profits and ride the rest out – but nobody’s selling anything.

This is why I think the lack of supply is the single biggest issue in this market. And in time, I think it will become much more obvious. [Ed. Note: We’re using the term “secondary market” in this instance to mean sellers of bullion and not the scrap market.]

There are only five major mints – U.S., Canada, South Africa, Austria and Australia. Yes, there is a Chinese Mint and a couple Swiss Mints and some private refiners, but they amount to very little in the overall scheme of things. We’re in a situation where the mints are limiting the selection and raising the premiums, and this is occurring at a time when most people own no bullion. As it becomes more apparent that people want bullion instead of paper dollars, I think you'll see premiums go parabolic and supply get even tighter.

This should dispel a lot of myths about the industry, notably there is NO secondary market. No one is letting go of anything.

Eric Sprott On Last Weeks Fall in Silver

“We have been a net buyer of silver every day. I will be a buyer of silver today. I’ll be a buyer of silver tomorrow… I have no fear of silver here.” – Eric Sprot

A sudden sell combined with a rise in  margin increases seems to be an orchestrated manipulation for the commercials with their short positions.

The Silver Correction Eveyone is Looking For

Finally, we have a true correction. Down more then 6% on the day at noon. This is the May correction everyone has been calling for and looking for.

I'm buying on the way down and will continue to buy it to the bottom and then on the way back up as well. I foresee triple digits this year and I'm in it for the long haul so this is a great opportunity to add more.

Bank reports are due out tomorrow and most likely some manipulation going on here to cover short positions...all in favor of the little guy to add more!

I think we'll see low 30's or high 20's before it's done, then I predict it'll stay lower over the summer (mid 30's) until the big players get back from Summer Vacation. The old adage "Sell and May and Go Away" is still valid and I think we're seeing some of that reflecting on the market as well right now.

Keep buying, watch for dips and load up! The ride to the top is going to be well worth the trip!

Not Much of a Correction

Wow, that was a very short correction, in fact it wasn't a correction at all. Just a temporary dip that fooled many folks.

We still seem to be having trouble breaking that $49.00 resistance point. Silver has not had a rest for many months and it is way overdue, but given the dollar market it may not rest any time soon.

Technical charts have been so untrustworthy as of late, it's hard to say where we are going, or better yet, now fast we're going up. Up seems to be the only direction that Silver knows at this point.

Watching several online suppliers and the speed at which their stock gets depleted is amazing. Some small retailers are selling out the day that they receive inventory shipments from their suppliers.

So, I'll just keep buying and watching and laughing at those still in the dollar. China recently announced that they will get out of the US bond market to the tune of $2 trillion, or 2/3's of their holdings. When that happens, watch everyone pile on and sink the dollar even further.