The Newest Casualty in the Bankers’ War on Gold and Silver

post dateMarch 11, 2015  •   post categoriesEconomy, Freedom, Manipulation, Silver & Gold, US Dollar  •   post comments number38 comments

 

Another One Bites the Dust

Have you ever had pesky, unwanted cash, ya know… just lying around?  Sure, we all have!  All that dirty, old currency just sitting there, desperately needing to be disposed of.  Cuz’ spending cash, after all, is always the thing that everyone just has way too much of, right?

Wait though!  Lemme ask you another question: have you ever looked at all that unwanted currency, needing to lose it all in a pinch, but just didn’t quite know how to go about it?

If you said yes, don’t feel bad, you’re not alone!  Be assured though, there are endless, creative ways to go about it disposing of that “clumsy cash”.  Allow me to give you a few ideas!  You could:

Cram it all down the garbage disposal:

Mining 1

That always works nicely!

You could flush it down the toilet…

Mining 2

Always an amusing choice!

Hmm, let’s see….oh!  You could jettison it out of a plane window to random onlookers below!

Mining 5

That one is always popular with the onlookers, by the way!

While there are many actions in our world, which you could take to help you needlessly burn through large piles of cash in a hurry, though…

Few of them can hold a candle to the more keenly-effective, and gut-wrenching practice…

Of buying some gold and silver mining shares!

Yes!

In all seriousness though, the recent news coming from that industry are anything but funny.  In fact, it just gets more harrowing by the day.

One of the things I’ve been nearly alone on in the precious metals world, is the fact that I’m always cheering for lower prices, not higher ones.  I take this approach, because I know that the con of price suppression can only exist as long as adequate flows of new gold and silver can be sourced.

Since that’s true, perennially lower precious metals prices are a stackers’ best friend!  This is true, because at some point in the not-too-distant future, those who produce it will hit the brick wall of reality.  They will mathematically reach the marker, where their production will be insufficient to either: 1) satisfy stackers’ demand, or 2)stay in business themselves…..or both!

I’ve hoped that our common banking enemy(in wanting and needing lower prices) would continue to pull out all the stops in the market rigging, thereby ending this generational con as quickly as possible.

Since we know that in the Comex and LBMA, nothing can stop the bullion banks from dominating the paper trade of metals, it stands to reason that the only thing that can and will stop the market rigging, is their taking this price-smashing thing too far.

Way. Too. Far.

Remarkably, the enemy hasn’t disappointed in that category, either! That’s precisely what they’ve spent nearly the last 4 years doing now in the silver market.

In times past in this bull market, the banks always chose to cap silver and gold for a year or two, and then allow a follow-on price rally, to release built-up pressures in the sector.  Not this time, however!  This time they’ve held the metals underwater so long, that real casualties are now cropping up, especially in the leveraged sectors responsible for producing these metals in the first place, like the mining industry.

The Latest Casualty of Price Suppression

Speaking of which, let me introduce you to the newest casualty of the price-rigging scheme, this time in the mining sector.

SD Bullion


In an article that I wrote in early November 2014, I said this, concerning Allied Nevada Gold:

“Allied Nevada Gold Corp.(symbol ANV): 

Current share price: $1.39.

Top closing share price in 2011: $43.71

Total loss from the top: 96.8%

That last figure is about the closest thing to zero from a top that you can probably find, without just calling it quits!”

Uncanny, brothers!  Because….on March 9th, Allied Nevada did call it quits!  That’s right, Allied Nevada has filed for bankruptcy…and honestly, can anyone blame them?

Why on earth would you go on hustling to labor even one more day, while drowning in senior debt payments, just to mine a product at a loss(a product which only keeps endlessly cratering)?

I mean, when the price chart of your shares looks like this:

Mining 6

 

Why not just pack it in?

That’s the reality that this company had to face.  It’s frustrating and sad.  Frustrating, because these miners’ execs all know their product’s price is rigged, but won’t do the slightest thing to fight these banks publicly.  Sad, because the shareholders are all likely to be left with nothing, while the culprits responsible for their financial troubles, will make off with the lions’ share of the loot.

Think about it….who funds these mines in the first place?

That’s right, the big banks.  They’re the ones who are owed senior bond payments(if the mine survives), and who end up owning the entirety of the company’s assets, if they finally succumb to the market rigging.

Either way, the banks win, and you(the shareholder) lose.  Just take a look at the statement from Allied Nevada on their Bankruptcy Reorganization Summary, explaining why they filed for Chapter 11:

This was done to allow us to implement an agreement that was reached with…its secured bank lenders to effect a reduction in the Company’s funded debt obligations and provide the Company with additional liquidity.  

SD Bullion


Allied Nevada will continue to operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.  Under the proposed financial restructuring, which requires Bankruptcy Court approval, Allied Nevada’s trade creditors and vendors are expected to be paid in full.

Whew!  What a relief!  The trade creditors & vendors will be paid in full!

The banks and other creditors, who will extend a new line of credit(getting recouped for much of the invested capital in the deal) now own the mine itself, lock, stock, and barrel….while the shareholders are left with nothing!

This same exact scenario is something I was within a hair of experiencing myself, back in the 2008 financial crisis, with another mine that I owned.  Fortunately, I escaped that fate, but tens of thousands of others did not.

As prices continue to track lower and lower for gold and silver, the amount of equity these mines can raise also goes lower and lower.  Meanwhile, the debts in some of these companies has gone virtually exponential.

Of course, the mines will stay operational and keep producing silver and gold during this entire painful restructuring process, and the reason why is obvious:

The metal must keep flowing, for the con to keep going!

The mining industry’s brilliant strategy of “mining even more of their cheapest ounces more quickly” to stay afloat is failing. Mining high-grade deposits has only delayed the inevitable.

Rather than banding together, to form a legal arm to pursue and prosecute these bullion banks for causing them and their shareholders untold harm, the executives and boards of directors of these companies have instead wasted years pretending that there is no market rigging in precious metals, in order to remain “respectable”.  By and large, they deserve what is happening to them for their shameful, complicit silence, but their shareholders do not.

The bankruptcy of Allied Nevada Gold should be an enormous wake-up call about the failing health and tenuous position of the entire mining sector.  For a mid-cap darling, like Allied Nevada Gold, to go from $45 a share to .85 cents(to zero!) in just 3 years, shows just how artificial and unsustainable these current gold and silver prices are.

Conclusion

It has been my belief for awhile now, that this operation to hit both gold and silver, isn’t just about gold and silver, but about the mining industry as well.  After all, former JPM traders announced awhile back, that it was their intent to raise a pool of up to $300 million dollars to buy mining shares.  Ain’t that rich?  I mean, what could be a sweeter deal than picking up the pieces of the companies you helped destroy, for pennies on the dollar?

Folks, this is another reminder of why we stack: the banks can rig this game for far longer than most mining companies can stay solvent.  

As challenging as it is sometimes to fight this battle as a stacker, at least when you hold physical silver and gold in your hand, you hold an asset which:

Cannot declare bankruptcy. 

Cannot default to its creditors.

Cannot miss a bond payment.

Cannot bring about its own demise through mismanagement.

I know it doesn’t feel like it right now, but this bankruptcy is further proof that stackers WILL win this battle, as new silver and gold supply from miners dries up slowly, even if that process takes some time.  This company’s demise is an undeniable reminder, that “business as usual” in precious metals rigging will abruptly end, though none of us know when exactly that moment will arrive.

As zerohedge, SRS Rocco, Chris Duane and others have recently said: “peak precious metals” is a reality, it is coming(if not already here).  When it is realized by the masses, it will be in hindsight, and by then it will be too late.  The bankers’ are caught in a catch 22: they need lower prices, but they cannot maintain the quantities of gold and silver that they need to continue the rigging, at those prices. This bankruptcy is further evidence of this truth.

Without an immediate, dramatic turnaround in the paper price of gold and silver, the defaults and bankruptcies in the mining industry are only just beginning.

Allied Nevada isn’t the final, “parting shot”, it’s the “harbinger of doom”, the messenger on horseback!   This war in gold and silver is red hot.  I hope you’ll be standing there alongside me when it ends, with your stacks of hard, physical coins and bars within reach.  There will be plenty of victims yet to come in this war.

Be the victor, not the victim.

Mining 3

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