Gold, Silver, and Electricity

March 29, 2001

Silly comparison? I think not. First, let's look at "electricity." Consider electricity on the left coast especially, and that is California. For years, California regulated electricity to the ultimate degree. No new plants could be built because of absurd "environmental" rules and other artificial heavy baggage. Rates were controlled, as was every facet of the industry. New plant construction applications were routinely denied, as if it were an appeal for a traffic ticket. A new South Central LA super clean plant, which would have paid $8 million in taxes, improved the area, provided employment, and supplied needed current was recently voted down by an ignorant electorate. For decades, new plant construction, new lines, and permanent improvements have been denied utilities. That's why they elect Democrats.

Now the chickens have come home to roost, and as if it weren't bad enough already, the state PUC has devised a plan to raise rates by 50%, with the highest increases going to the highest users. Does this remind you of a famous quote from the Communist Manifesto, which says, "From each according to his ability, and to each according to his need?" When this happens, the race to the borders and seeing who can have the "For sale" signs painted on the factories fastest, will be something to witness. Stupidity piled upon ignorance….

Hasn't the same thing been happening to the gold and silver mines and producers? California electricity producers have been denied needed funds and permission to build much needed plants to serve the increasing population. Gold and silver mines have been denied the needed prices to survive, explore, maintain, and improve their mines. These prices have been denied them by the same governmental forces that denied California's electricity producers the right to build plants and meet the needs of their customers. Gold and silver mine owners have been denied needed profits because of government and bank manipulations which have kept gold and silver prices down so low, that many mines have closed and are not recoverable. Governmental manipulation of California's electric industry has resulted in a doubling of prices of electricity, and the end is not in sight. New plant construction will be underway, and the manipulators will be ousted perhaps, but the damage has been done and it will take years for California to recover. California's blight may even spread to the rest of the states it is said, thanks to the EPA, and tree huggers anonymous preventing construction of generating plants in other places. In my state of Colorado, a new coal plant has been proposed, because gas has become too expensive…again thanks to regulators. Gold and silver mines have been harassed to death here in America by MSHA (the mining version of OSHA) and the EPA. The handful of American mines still open, are a small fraction of the gold and silver mines that could still be open and operating profitably if it were not for those two agencies. Those two agencies aren't alone in cutting off American mines, as the BLM and Forest Service have claimed ownership of practically every mountain in the west, which has abundant minerals in them, and permission to mine them has been denied. If the manipulators hadn't been artificially holding down prices, the world may not have lost quite a few producers of gold and silver. A further comparison is also in order, and that is demand. California's demand for juice has escalated, just as has the world's demand for gold and silver. All the while, the producers are hammered, and production has slowed, both in electricity and gold and silver. What happened in California, was that when it hit the fan and brownouts commenced, everyone suddenly realized they had been fooled by low prices for so long, they had taken them for granted.

Gold and silver have been held so low, and production sources so hampered from their maintenance, exploration, and improvement, that when it hits the fan; like with California electricity; the howls will begin. Mines are closed for lack of profits. The public has been lulled into a false belief that gold and silver are worthless, and pieces of paper with ink on them have value. Californians were lulled into the belief that there was cheap electricity thanks to regulations, and that it would last forever. Gold and silver buyers have been lulled into the thought that absurd, below cost of production prices will last forever, because after all, gold and silver have no actual value, whereas pieces of paper with ink on them do. If gold and silver are so valuable, why aren't the prices higher? These are the ones who bought Yahoo at $250, with a P.E. ratio of zero, and watched it fall to $14. "Gee, I wonder what happened?"

The California electricity, and gold and silver prices are so close that it is scary, and a sure portent of events to come. When something with an actual, historic value for thousands of years has been manipulated to a price that is at or below production cost for specious reasons, the end will not be far ahead, just as California's electricity debacle had to happen. Gold and silver prices HAVE to go up stratospherically, just as sure as 2 plus 2 makes 4. Market manipulation, for whatever reason, cannot have a permanent life, as history has shown over and over again. When one sees artificial price manipulation, or government controls that manipulate or force prices below cost, which includes new plant construction, maintenance, and profits, as with the California debacle, and the gold and silver mining industry have had forced upon them, the forces that did the dirty work will fail eventually. When the manipulators and regulators have failed, the prices will go to their market indicated levels, which in the case of California will be over market to make up for lost time, and the same may be true for gold and silver. The demand is there, the producers are failing, thereby cutting off supplies of gold and silver. There is no place in the world that silver can be produced for $4.40 per ounce, even with slave labor. The warehouses are empty with demand constant. Why cannot the people see that this has to end? For the same reason that they kept buying stocks till the end happened, and they got wiped out. When gold and silver begin their imperative massive escalation in prices, the masses will begin to buy. When gold went to $850, and silver to $54, people were breaking down my door, and I was refusing to sell to them! They were too late, and I told them so. They hated me, just as they would have hated an honest stock broker who advised them not to buy Yahoo.

When has the majority EVER been right? Were they right in Noah's day? Jesus Day? In 1929? In 1987? In 2000? Are they right now in making a gold broker's day one of leisure, when we should be frantically filling orders while the prices are at all time lows, and below production costs? No, but when it starts up in a big way, we'll be busy as bees in a flower garden. Only the smart ones will have bought now, with the rest being like the owners of Yahoo at $250, when gold gets to $600, or $1600, or $2600, when pieces of paper with ink on them are losing fast. What is historic, tangible, beautiful, fungible, and accepted everywhere, will endure. Pieces of paper with ink on them, just like Yahoo, will not.

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