Market Meltdown Friday Oct. 10th.

It's 11:00 am in New York as I write and so far this morning the Dow has:
opened lower than last night's close, plunged 570 some points within in an hour to almost go into the 7,000's, 8059 to be precise, then rose within another hour to go up 600 to a little above the open price. Now it's back down 270.

Wow! If this was a roller coaster, everyone on board would be dead with broken necks from whiplash! That will teach the SEC not to not allow people to short stocks! (The big selling started yesterday afternoon when they lifted the short ban and the dammed up shorts flooded the market, kind of an odd visual picture of underwear racing down a mountain canyon made up of high rise New York buildings).

Meantime, the spot price of silver is $11.77 an oz., and spot is supposed to be the daily price of the physical commodity, but if you go to Kitco.com, one of the big market makers, they say they don't know when they can deliver to you if you want them to actually sell you some real physical silver, and if you're crazy enough to want to sell it to them today, they'll give you a $1.35 an oz. premium over "spot". Meaning the real spot price for one oz. of silver this morning is actually over $13!

What is going on? First, am I a silver "bug" whose opinion now should be totally dismissed for even mentioning the security of physically owning silver and gold in these crazy financial times? Well, for starters, I don't own 127 million oz. of silver physically stored in a vault in London, nope... that honor goes to Warren Buffet! If the much touted wizard of investing owns that much physical silver in a vault, he's the King Cockroach of silver! No one calls him a silver bug, nope he's a Wizard of Wall St. Maybe if you own over a billion dollars worth of silver and it's only 1/40th of your net worth, then you're elevated to guru from bug.

Anyway, why can you buy "spot" silver in the paper markets at less than the price of spot silver in the physical market? Paper, that's the key word. You can buy pieces of paper that say you own silver in an ETF, or on a commodities exchange, because they don't actually have enough physical silver stored to honor all their client's claims of ownership at once if all the clients demand physical delivery of their silver! (This is a very old type of swindling that goes back to the time when people invented silver certificates, pieces of paper saying that you could get an oz of silver for each denominated certificate, what we used to call US dollars when I was a little kid until 1964 when the US government gave up on the idea cause it was too hard to borrow money when it actually had to be real money. Since then a nickel Coke is now $1.00 or more.)

The ETF's contract with storage companies that promise to dutifully warehouse silver when a person sends money in to the ETF. Yet these storage companies aren't audited. They just say they have as much silver as they've issued certificates. Doesn't this sound like another perfect storm where we wake up one morning next week and listen to a reporter on CNN reporting from one of Bermuda's spa hotels?

"To the amazement of all, the most powerful and honored Wall St. company called ______________, (fill in the blank here, already you could put in Bear Stearns, Lehman etc.) has gone bankrupt and has announced they really don't have the silver in storage that they said they did. Their top executives could not be reached at the beach in Bermuda where they have all landed courtesy of their golden parachutes, as they are currently in a stress therapy seminar entitled, "How not to feel guilty about cheating other people out of money."

This reporter asked if they might be available later on in the afternoon but the massage staff from the Hotel that just flew in by private jet after giving $23,000 worth of massages to those troubled AIG execs last week said, "Of course not, these are VIP's desperately in need of life saving massages! Are you crazy? Do you want to upset these geniuses of Wall Street upon whom their very existence our future depends?" (Masseuses speak in their own odd, grammatical way.)

This reporter observed that if they were such geniuses, then why did their companies go bankrupt? With a shake of their heads and toss of their towels, the totally white uniformed, buff and beautiful male and female massueses refused to answer any more questions and stomped off in a huff down the palm lined concrete sidewalk while cursing me in Swiss, (they all speak 11 languages).

I guess I rubbed them the wrong way."

The advice for today is to go out and find some physical silver if you can and hide it in your house, the middle class equivalent of yet again successfully emulating Warren Buffet. Oh, and don't rush out and sell your stocks now, you're too late and the party's over. The sky isn't falling. The Fed will eventually lower to below 1% and all will be set right in another rush of mortgage refinancing as mortgages for about a year go to the 4% range as inflation holds off and the world recovers.

But then hold on! If that flood of shorts was bad, wait until it takes a wheel barrel of hundreds to go grocery shopping! That's when you'll be glad you hid that pile of silver in your house.

Come back soon for more on the reason silver is going to be rising soon - the silver zinc battery for the electric car, twice the power for the same weight!

Oh, and my other advice for your future security is to learn massage and 10 more languages so you too can get a job in the future where the middle class has had all its money taken away and there are only two jobs left , VIP and masseuse, and you can only be a VIP if you already were as of the day you read this article. While this sounds like the decline of Rome with the rich and the slaves... it is!