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Is Wo Fat Dumping Silver?
By Charles Savoie (copyright 2001)
There is no enjoyment greater than to sit quietly with a cup of tea and
possess full knowledge of those things which have not yet
occurred---quotation from the Red Chinese spy Wo Fat, from the TV series
Hawaii Five-O, air date 10/10/72. The perceptive reader at once understands
my cynical humor. Wo Fat was a fictional red Chinese espionage agent who was
constantly locking horns with Steve McGarrett, head of the Hawaii state
police. Wo Fat had several conspiracies to destabilize the United States
which were all thwarted by the hero. In the present silver market situation
we rely upon information, reason, and above all the passage of time, (time is
on my side, say the Rolling Stones) which will bring us back to the triumph
of free market forces, to squelch the Wo Fats of the silver market (the naked
short sellers)! It seems rumors are important in the armamentarium of those
who wish for another decade of low silver prices. What these clowns do with
information is akin to what happens to food after it has worked its way
through the body. The Gnomes of Zurich, in this case, probably including
large industrial silver consumers, have been running the rumor mill at full
blast for months with stories about China dumping tons of silver on the world
market, and they say this is the reason, along with declining demand by way
of photographic tourism decreasing along with airline travel (they shy away
from mentioning sharply curtailed production and surging military use
offsetting this), for the slump in silver prices. Nothing is said except by a
few whistle blowers about the fact of the short position in silver, which has
ballooned in size recently, and has gone from plain crazy to stark raving mad
in view of statistics from sources like CPM Group which show inventories
declining rapidly towards a ground zero scenario. Whether the Chinese silver
export sales are 15 million, or 60 million ounces, it should be seen as a
straw dog situation because reliable information has established this silver
is mainly coming from concentrates processed at refineries, such concentrates
having originated outside of China most likely as byproduct silver. When silver
prices reflect free market forces at last (probably by spring 2002 when
leasing inventories are likely to be at total depletion) I suggest all the
silver bears recite the quotation of Steve McQueen, the sailor shot by
Chinese militia at the end of The Sand Pebbles (1966)---What happened? What
the hell HAPPENED? Or maybe they will point a sword at someone at a ballroom
dance, like Charlton Heston did in 55 Days At Peking (1962).
A limerick:
Silver prices are in the dumps,
The smart investor jumps!
Soaring prices bring us wealth,
Multiply financial health!
Short seller take your lumps!
The Chinese are as good as any other people, but sadly, as with many
nations, have leadership whose intentions appear less than angelic. From the
purges of the Cultural Revolution to the outrage of the Tienamen Square
incident, Chinese leadership is hardly a textbook case of caring for the
common man. It was not only the USSR but also China who was a player in the
Cold War. To some extent, a cold war is still ongoing concerning Chinese
intentions. It must be believed that Japanese atrocities in China during WWII
are an item to be avenged on the Red agenda, but only after the so-called
renegade province of Taiwan has been recaptured by force. Tibet was taken by
force, and Richard Maybury of Chaostan.com is of the view that a new Axis has
been formed against U.S. interests, to include China and some powerful allies
such as Iran.
If China has a strong dislike for America, as the Los Alamos National
Laboratory/Wen Ho Lee episode (concerning our Trident II launched W-88
warheads miniaturized with no loss of power) and the indignation over an
American reconnaissance plane making an emergency landing on Hainan Island
last March 31, strongly suggests, why would they wish to help us by dumping
tons of (supposedly) Chinese silver on the world market, at the very time
when U.S. stockpiles are shrinking to embryo size? We have a military action
now in Afghanistan, and Lockheed Martin has been awarded a $200 billion
contract from the Pentagon to build military jet aircraft. All this
manufacturing and military equipment requires silver for optimum electrical
conductivity. If China wants to damage the U.S., a good way would be to not
dump their silver at cheap prices, contributing to our war efforts. The
rational idea in light of the history of the Chinese regimes dislike of the
West (Chinese nuclear test at Lop Nur, October 20, 1964 as one of many
examples of long standing militaristic intentions; at this time, Taiwanese
pilots flew some of our U-2 spy planes) is that they are actually withholding
silver produced on Chinese territory for their own war plans and
infrastructure development, including superconducting transmission power
lines. All modern electronics requires some silver for top performance, and a
Chinese official boasted that their ICBMs could now strike Los Angeles (Sun
Times, 8/2/96). Whether they are speaking of SS2 Silkworm missiles, or Dong
Fengs, or satellites, night vision equipment, or anything with advanced
circuitry, they need silver. And they know we are running short of it. So it
makes little sense for some Wo Fat type in Beijing to be orchestrating the
dumping of silver to depress the price. (While most of the media wanted to
focus on Bill Clintons marital infidelity, immeasurably worse scandals got
less attention, including the transfer of ICBM technology to China by Hughes
Electronics and Loral Space & Communications, approved by the Clinton
administrationóNew York Times, April 4, 1998; hypocritically enough, this was
just weeks before the Clinton white house slapped India with sanctions for
testing 5 nuclear devices, as they are more worried about China than
Pakistan!) There are some jerks on the scene who would do us a favor if they
would get on a bottle cap and drift out to sea! China is among the most
politically repressive nations, and their militarized police maintain
photographic files of uncounted millions of Chinese who have been routinely
detained, so they need silver for that too. Perhaps Kodak and Fuji will act
as suppliers, as these firms have interest in the Chinese market. One of the
best-known geopolitical facts is that Israel and Taiwan are in collaboration
with U.S. foreign policy, so it isnít strange that the Taiwanese and Israelis
have collaborated on defense matters, and it is fair to assume China looks
askance at this. China has been vocal against Taiwan having nuclear devices
(Bulletin of Atomic Scientists, September-October 1998, page 56) so to assume
that China would be ignorant concerning our strategic need for silver and
that of our allies and the impending shortage of it, would bring a rejoinder
from Mr. Spocks school of Vulcanian reasoning, or even from an emotional
human.
There are other matters which may be considered here, such as the NATO air
strike which damaged the Chinese embassy in Belgrade Yugoslavia on May 7,
1999, causing fatalities. The U.S. and Britain insisted that the attack,
launched from a B-2 bomber from Whiteman Air Force Base in Missouri, was a
tragic error resulting from the mistaken use of an old map. According to
information from The Observer (London), October 19 and November 28, 1999, the
Chinese embassy had an electronic profile, which NATO located and pinpointed.
It seems that there was a radio transmission emanating from the office of the
military attaché at the Chinese embassy, which was sending out intelligence
information in collaboration with Serbian forces. So precise was the
targeting that the North end of the building was undamaged by the JDAM (Joint
Direct Attack Munition missile of Boeing). The incoming position of the
missile is checked, rechecked and adjusted by fixes from seven satellites. So
here we have another motive for Chinese leadership to not want to help us by
making cheap silver available. Why would they go against their own interests?
Billionaire investor Richard Rainwater, in an article From the Fort Worth,
Texas, Star Telegram of March 3, 1995, said that investments in natural
resources will be handsomely rewarded in coming years and that China entering
the world markets in a big way will drive a prolonged, global surge in demand
for petroleum, metals, lumber and commodities, things you desperately need to
build the economy of a nation of a billion plus people just beginning to
practice capitalism. Rainwater said the country to bet on is China, China,
and China. And China after that. China is Japan with a zero added on. Try to
picture the Chinese silver demand when its consumers reach 25% the level of
affluence of Americans. This is equal to doubling the silver consumption of
the United States. I suggest that if China is dumping whatever silver they
have on the world market, there probably is not a bean sprout in Chinatown
either. Because both suggestions are wildly ridiculous.
Friends, no guarantee can be made as to how much time remains for you to
take positions in silver, whether by buying physical or some of the good
silver mining stocks, which can almost be counted on the fingers of one hand.
Whatever you do I counsel you to do it soon. No amount of derivative voodoo
economics can hold the price of anything down once critical shortages begin.
There was a Texas oilman in the early 1980s named Eddie Chiles (Western
Company of North America) who spread thousands of bumper stickers to his
shareholders, which read, IF YOU DO NOT HAVE AN OIL WELL, GET ONE! In the
coming silver crisis, we can watch for one, which reads, IF YOU DO NOT HAVE A
SILVER MINE, GET ONE! In closing, allow me to point out that allegations that
China is dumping tons of silver on the world market, because they want to
depress the price, appear as nutty as the statement made by banker John
Hamilton to rancher Lucas McCain in The Rifleman TV series of the early 1960s
(set in late 1870s New Mexico)---Iíve got to ship $20,000 to the Federal
Reserve in Albuquerque!
(For all you young persons, there was no Fed till 1913 and it has never had a
branch in Albuquerque. But you can dine with sterling silver there at Chinese
restaurants, yes!)
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