Has the Evil Empire, JP Morgan, Fallen?

JP Morgan, alias the Dark Side, seemingly has been beaten by the Jedis led by Max Keiser, fighting for a manipulation-free silver market. Mr. Keiser's campaign to bankrupt JP Morgan by prompting investors to buy at least one ounce of physical silver has been gaining steam steadily. JP Morgan has been widely believed to hold a large naked short position in silver, that has in the past acted to depress the market price of the precious metal.

Some commentators have ridiculed the belief that JP Morgan has been largely responsible for a long term, sophisticated scheme to manipulate the prices in the silver market netting billions in profits. At any rate, the bank's outsize role in the commodity was definitely controversial, and it seems the bank has caved. It has told the Financial Times that it has meaningfully reduced its role in the market, and that its new position was "materially" smaller, though whether that position is net-short or neutral is unclear. The bank says the decision was purely the result of it wanting to reduce controversy, though skeptics would obviously note that if it were short the metal, then the fact that silver continues to gravitate towards $30/oz would make for a good time to get off that train.

For my money I think we're just at the end of the first Star Wars movie. The Death Star is blown to smithereens, but the Empire can still Strike Back! After all, the evil emperor, Bernanke, is still safe and sound and plotting his evil plots!

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

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China's Number One Coin Counterfeiter!

Liu Ciyun (who prefers to be known by his eBay handle, “Jinghuashei”) is a typical young upwardly-mobile Chinese suburbanite. Married, with a 2-year-old son, Jinghuashei has worked hard the past few years to build a business.

Like most legitimate businessmen, Jinghuashei operates within the laws of his country, and has earned official certification for his small production facility, which employs up to 30 people. The products he sells are properly licensed, where appropriate, and absolutely, 100 percent legal to produce and sell in China.

The only fault that most Americans might find with Jinghuashei’s business model is that he is in the business of producing counterfeit coins.

Jinghuashei’s company is called the Big Tree Coin Factory. It is located in the Fujian (also known as Fukien) province in the southeast portion of the People’s Republic of China. This area is well known to be a hotbed of counterfeiting activity and Jinghuashei acknowledges being aware of approximately 100 competitors who are manufacturing fake coins.

Jinghuashei says that his coin factory is probably the largest of its type in China. It produces in excess of 100,000 fake coins per month for Chinese coin types alone.

He says he is currently only selling about 1,000 counterfeit U.S. coins per month, mostly on eBay. His primary motivation for servicing this comparatively small volume business is that he is making contacts with people he hopes will come to China to buy counterfeit coins on a wholesale basis.

Jinghuashei also claims a sales volume of several thousand counterfeit coins per month in world coin types.

Legal business
Jinghuashei is forthcoming about his business practices. He is certain that he is operating legally in China, which requires that the coins he makes are dated 1949 or earlier. As long as he sticks to this one important regulation and maintains his business certification (license), he says he has nothing to fear from the authorities in China.

But what about the United States of America?

Isn’t he worried that the Secret Service or some other U.S. government agency will come after him for making counterfeit U.S. coins? After all, the coins struck by the U.S. Mint, regardless of date, are all still legal tender, and thus subject to U.S. coin counterfeiting laws. It is illegal for him to sell these coins in the United States, even via eBay.

Jinghuashei responds by claiming that he is operating within the confines of the Hobby Protection Act, a U.S. law that requires all nongenuine numismatic items produced after 1973 to be permanently and conspicuously counterstamped with the word COPY. When informed that his eBay auctions are not in compliance with this law, because he is using a punch that says REPLICA, he seems unconcerned.

Despite numerous online chats and e-mail exchanges with him in which the U.S. law has been discussed, Jinghuashei still hasn’t changed his punch to be in compliance.

Although he has never said it outright, it is apparent he feels invulnerable to U.S. law enforcement because they are unlikely to go all the way to China to prosecute him for the relatively small sums of money his eBay sales generate.

The word “replica” was used in conversations with and questions of Jinghuashei since that is the term he prefers and he appears to be more open to talking than if the terms “counterfeit” or “fake” are used.

Production costs
Jinghuashei acknowledges that the minting equipment currently used in his Big Tree Coin Factory is old and the images he provided show a cramped and dirty environment. But that helps to keep Big Tree’s coin manufacturing costs very low. He says he has access to more modern presses when he needs them.

Jinghuashei says it costs him only 8 cents each to produce each fake Chinese coin using iron-based planchets. Counterfeit U.S. coins cost more – an average of 50 cents each – because the copper and nickel planchet alloys cost him more to make. Jinghuashei says these figures include his entire expense, including materials, labor and marketing.

On eBay, Jinghuashei’s single-coin auctions are usually listed with a starting price of 5 or 10 cents, and they usually close around those prices when he gets a buyer.

Asked how he makes a profit if it costs 50 cents each to make his coins, he explains that he makes most of his profit from the shipping expense he collects from buyers.

This is a common practice with China-based sellers on eBay. They sell the item very cheaply, but then charge as much as $70 or more for shipping. Doing this serves two useful functions. First, their Final Value Fee expense is minimal, since eBay bases this fee on the auction’s closing price. Secondly, if an item is returned to the seller for some reason, the buyer can only recover that minimal bid amount since shipping and handling is typically nonrefundable.

Most of the Big Tree Coin Factory’s current profits are coming from the large number of fake Chinese coins it produces. Many of these coins are replicas of ancient Chinese coins. There is a strong demand for them at flea markets and in tourist zones. Jinghuashei does an active wholesale business in fake Chinese coins, most of which are sold within China itself.

Some of the photos Jinghuashei provided of his storefront operation, the Big Tree Temple Coin Shop, depict fake Chinese artifacts, but he says that some of the goods for sale in the shop are produced by other counterfeiters.

Also evident in photos he provided are what appear to be slabs similar to ANACS slabs, and containing fake U.S. coins. When queried about the slabs in this photo, he became very wary.

Reprint from Coinworldonline.com

Update: Jinghuashei was kicked off eBay back in August 2010, FINALLY! He had a total of 9,240 feedbacks, 52 of which were negative in the last twelve months.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

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CEF vs. GLD & SLV

"Paper" gold and silver is widely traded today in three investment vehicles, the close-ended fund CEF (Central Fund of Canada), and the twin ETF's GLD - SPDR Gold Trust, and SLV iShares Silver Trust. Whole oceans of ink have been spilled detailing the good and not-so-good points of these funds. My goal here is to distill the salient points down to the fewest words possible to help make your due diligence task somewhat less...well...tasking.

To Audit or Not to Audit - CEF's bullion reserves are audited by an independent firm, Ernst & Young LLP., twice per year. GLD and SLV on the other hand do not permit any such transparency. Echoing the former sentiments of disgraced trader Bernie Madoff, investors are just supposed to trust the "word" of the funds that the bullion is there.

Insurance - CEF's gold and silver is fully insured by Lloyd's of London. GLD and SLV fully acknowledge that their "reserves" are not insured against any happenstance that may prevent them from repaying their investors in gold or silver. They even reserve the right to compensate investors in US paper dollars if necessary.

Counter Party Risk - CEF reserves are fully allocated and segregated with the name of each investor attached to particular gold and silver bullion. GLD and SLV's "alleged" bullion is unallocated and unreserved. There's no telling just how many competitors you'd have to fight off to get any of your precious metals with these funds.

Conflicts of Interest - CEF has been in the close-ended fund business backed by gold and silver since 1961. Their directors are well respected in the precious metals market. The custodians of GLD and SLV are HSBC and JP Morgan respectively.

Where do I start with these two banks (above)? Well, let's just say if there was a Who's Who publication of precious metal naked shorters and market manipulators these firms would be prominently featured. How can you trust a custodian of your long interest metal fund who is accused of making fortunes by manipulating the metal prices downward? Anyone thinking of the fox guarding the chicken coop metaphor here?

Premiums Above Metal Price - We finally reach a point that is in marginal favor of GLD and SLV and to the deficit of CEF. CEF unlike it's ETF step brothers often sells at a premium to the price of gold and silver. If you're a day trader that means you can buy and sell shares of the ETF's more cheaply than you can with CEF. However, for my part, I'm in a long term holding strategy so a small premium is the least of my concerns. Frankly, I see the premium as just an outward manifestation of the inherent preference by sensible investors for a fund that has actual, real gold and silver backing it up rather than glittering ethereal promises of metals.

As you might suspect, I own CEF and wouldn't touch GLD and SLV with your...well...hand!

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

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Silver Will Hit $50 in 6 Months!

JP Morgan and HSBC are the 2 largest traders of silver, and both banks have very significant short positions in silver.

The rumor on the street is that both banks will be forced to cover their silver shorts, and in doing so drive up the price of the metal astonishingly. Some traders are targeting the $40-$50 level within 6 months! Adding much intrigue to this rumor is the fact that silver began its most recent breakout the exact same day as JP Morgan announced they would be shutting down their proprietary commodity trading business.

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Rumor has it that JP Morgan is just looking to cut their losses in silver and cover their shorts. This could be a possible reason why silver has skyrocketed in the last 2 months. Of course, JP Morgan’s involvement in the silver surge is little more than unsubstantiated rumor, but the basic premise still holds true.

Regardless of who actually holds these silver short positions, they will be forced to cover at some point. When that happens, an even larger short squeeze than the one we are currently witnessing may occur, driving silver even higher. I continue to be long silver futures and call options, and will add on all pullbacks.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

CLICK ADS BELOW FOR FREE DISCOUNT!