Silver Stock Report
by Jason Hommel, May 19th, 2008
I received an excellent letter this morning from Bix
Weir, that quotes the law that shows the current
rationing of Silver Eagles is illegal.
If you are confused about why rationing should be against the law and how
it causes silver prices to be lower than the market price would
otherwise be, I suggest you re-read my article on Rationing of Silver Eagles:
http://www.silverstockreport.com/2008/rationing.html
(Rationing is a form of
price fixing!)
==========
June 4, 2008
Henry Paulson
US
Secretary of The Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Edmond C. Moy
Director of The US Mint
801 9th Street, NW
Room 8S23-3
Washington, D.C. 20220
RE: US Silver Eagles Illegal Rationing
Dear Sirs:
It has come to my attention that 1oz US Silver Eagle
coins are being rationed by the US Mint to 13 authorized dealers and not
being made available to the public in adequate amounts.
http://www.silverinstitute.org/news/pr29may08.html
According to US Law: 31USC5112(e)
this action is illegal and I demand that this rationing program end
immediately.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+31USC5112
(e) Notwithstanding any other provision of law, the
Secretary shall mint and issue, in quantities
sufficient to meet public demand, coins which--
(1) are 40.6 millimeters
in diameter and weigh 31.103
grams;
(2) contain .999 fine silver;
(3) have a design--
(A) symbolic of Liberty on the obverse side; and
(B) of an eagle on the reverse side;
(4) have inscriptions of the year
of minting or issuance, and the words ``Liberty'', ``In God We
Trust'',
``United States of
America'', ``1 Oz. Fine Silver'', ``E Pluribus Unum'', and ``One Dollar'';
and
(5) have reeded
edges.
(f) Silver Coins.—
(1) Sale price.--The
Secretary shall sell the coins minted under subsection (e) to the public at a price equal to the market value of the bullion at the time of sale, plus the
cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional
and overhead expenses).
(2) Bulk sales.--The Secretary shall make bulk sales of
the coins minted under subsection (e) at a reasonable discount.
(3)
Numismatic items.--For purposes of section 5132(a)(1)
of this title, all coins minted under subsection (e) shall be considered to
be numismatic items."
The law is clear that the silver coins must be
supplied to the US public in "quantities
sufficient to meet public demand" EVEN IF it means the
US Mint drives up the price of silver bullion on the open market in order to
obtain the silver needed to produce the US Silver Eagles. That rise in price
should, theoretically, decrease the current voracious demand for US Silver
Eagles and allow for the true price discovery of silver bullion. That's how
our freely traded markets are supposed to function in order to determine the
“fair market value” of any asset.
Unfortunately, the rationing of Silver Eagle coins
greatly distort the fair market value of both the coins as well as the silver
bullion used to make them. By rationing the coins, the US Treasury and US
Mint are artificially suppressing the demand for silver bullion thus creating
artificial downward pricing pressure on silver. The size of this artificial
price/demand loss is unknown BUT given that the 1oz US Silver Eagle is by far
the most popular silver coin in the world, I would suggest that the artificial
suppression is significant. For example, when the Silver Eagle rationing
program started in mid-March 2008, the price of silver bullion immediately
dropped from $21/oz to $17/oz thus trimming 20% off its fair market value in
only 4 days. Clearly the fair market value is being artificially distorted.
As stated in section (f) above, the public is entitled to purchase US Silver
Eagle coins at the "market value of [silver] bullion" plus costs
associated with production. Currently, that is not the case. I expect you to
end the rationing program immediately and fulfill
your legal obligation to the people of the United States of America.
The US Mint is not sanctioned to be a market maker
or market manager in precious metals. The Mint is, by law, the facilitator of
US Silver Eagle supply and that supply is legally designated to be limited
only by the willingness of the purchaser to buy. If the Mint receives an
order for 10M ounces or 20M ounces or even more it is 100% legally obligated
to immediately supply those Silver Eagles from inventory or enter into the
physical silver market and purchase the silver bullion and process it. What
effect that purchase has on the price of silver bullion should not be of
consequence to the Mint since the price is passed on to the purchaser (plus
fabrication).
Luckily, for the stability of the silver market, the
CFTC has assured the world that there is no silver price manipulation and
that there is currently (and apparently always will be) an adequate supply of
physical silver to cover any demand that surfaces.
http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5499-08.html
I would also like to point out that the US Silver coin
has always had tremendous historical and monetary significance to the
citizens of the United
States of America. US Silver Eagles
represent "honest money" and to witness their continued
manipulation is disheartening.
I am also sending this letter to other interested
parties below to inform them that another silver crime is in progress.
Sincerely,
Bix Weir
US
Citizen
Cc:
Michael Mukasey, US Attorney General
A. Roy Lavic, Inspector General CFTC
Senator Dianne Feinstein
Congressman Ron Paul
=========
Sincerely,
Jason
Hommel
www.find-your-local-coin-shop.com
www.silverstockreport.com
www.miningpedia.com
www.bibleprophesy.org
-----------------
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