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March 26, 2011
Issue 140   -  The Constitution, Fading Away
 
 
 
The constitution of the United States is a VERY simple document.  It's not perfect by any means but if followed, will keep us out of the largest sand traps.  Unfortunately, it's not being followed.  In fact, it's almost being ignored.  Congress gives it lip service and I see many representatives pull their pocket constitution out, but that's just for show.  To demonstrate how this has permeated all levels of our government read this:
 

Here is a thought experiment concerning two men who have issued money. One issued gold and silver coins that will today bring more in dollars than he charged for them. The other issued paper notes that are today worth but a fraction the gold or silver they were worth at the time they were issued. One man is facing the possibility of years in prison after a federal jury found his issuing of money to have been a crime. The other man is walking around free and being treated by the authorities with great deference.

Which is which?

It turns out that the man walking free is Ben Bernanke, the chairman of the Federal Reserve. A one-dollar note that his bank issued used to be worth — as recently as, say, the start of President Bush’s first term — a 265th of an ounce of gold; today it’s value has plunged to less than a 1,400th of an ounce of gold. The man who issued the coins that will fetch more dollars today than when he issued them is Bernard von NotHaus, 67. He called his coins “Liberty Dollars,” minted them with some similarities to government money, and even though they more than held their value it turns out they’re against the law.

 
Here are more details about the conviction: 

Man convicted of creating counterfeit U.S. currency

 
WASHINGTON (Reuters) - A North Carolina man was convicted for creating and distributing a counterfeit currency that was very similar to the real dollar, a U.S. Attorney said.

Bernard von NotHaus, 67, minted Liberty Dollar coins in the value of $7 million dollars. The conviction concludes an investigation that was started in 2005.

"Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism," Anne Tompkins, U.S. Attorney for the Western District of North Carolina, said in a statement on Friday.

"While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country," she said.

The coins looked similar to official American currency, carrying the dollar sign and the words dollar, USA, Liberty, and Trust in God.

The Liberty Dollars were so widespread that the U.S. Mint and the Department of Justice issued a release in September 2006, warning consumers that the money was fraudulent.

NotHaus has been associated with organizations that question the legitimacy of the Federal Reserve and the U.S. system of currency.

The statement said that NotHaus founded the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code in 1998 and remained its president and executive director until 2008.

NotHaus advocated that the silver medallions were inflation-proof alternatives to the American currency.

He faces a sentence up to 25 years in prison and must forfeit 16,000 pounds of the minted money.

(Reporting by Wendell Marsh; Editing by Greg McCune)

 
Here's a guy who issued bills, backed by real, honest to God metal, who is being described as a terrorist??????  The Federal Reserve makes money out of thin air backed by nothing and that's A-OK?????  What am I missing here?  Has the world gone mad?  How could a jury be duped into such a ridiculous verdict?  Well, maybe the issued bills were deceptively close to "real" money, let's have a look:
 
 
 
 
 
As you can see this "counterfeit" money looked so much like the U.S. currency that it's easy to see how people would have been "duped" into buying this worthless gold backed paper......hmmmmm....OK, so maybe not.  Why did this happen?  It's all about maintaining a monopoly.  God forbid we have bills backed by metal, maybe people will start to ask why the "real" money isn't backed.  Yet, no one is outraged at this in congress.  I haven't heard a peep about this conviction.  Another example of nonsense: 
 
 
Jury Nullification Advocate Is Indicted
 
 

Julian P. Heicklen sat silent and unresponsive as his bail hearing began one day recently in federal court in Manhattan; his eyes were closed, his head slumped forward.

“Mr. Heicklen?” the magistrate judge, Ronald L. Ellis, asked. “Mr. Heicklen? Is Mr. Heicklen awake?”

“I believe he is, your honor,” a prosecutor, Rebecca Mermelstein, said. “I think he’s choosing not to respond but is certainly capable of doing so.”

There was, in fact, nothing wrong with Mr. Heicklen, 78, who eventually opened his eyes and told the judge, “I’m exercising my Fifth Amendment right to remain silent.”

Indeed, it was not his silence that landed Mr. Heicklen, a retired Pennsylvania State University chemistry professor, in court; it was what he had been doing outside the federal courthouse at 500 Pearl Street.

Since 2009, Mr. Heicklen has stood there and at courthouse entrances elsewhere and handed out pamphlets encouraging jurors to ignore the law if they disagree with it, and to render verdicts based on conscience.

That concept, called jury nullification, is highly controversial, and courts are hostile to it. But federal prosecutors have now taken the unusual step of having Mr. Heicklen indicted on a charge that his distributing of such pamphlets at the courthouse entrance violates a law against jury tampering.

Mr. Heicklen was arraigned on Friday in a somewhat contentious hearing before Judge Kimba M. Wood, who entered a not-guilty plea on Mr. Heicklen’s behalf when he refused to say how he would plead. During the proceeding, Mr. Heicklen railed at the judge and the government, and called the indictment “a tissue of lies.”

Mr. Heicklen insists that he never tries to influence specific jurors or cases, and instead gives his brochures to passers-by, hoping that jurors are among them.

But he feels his message must be getting out, or the government would not have brought charges against him.

“If I weren’t having any effect, would they do this?” said Mr. Heicklen, whose former colleagues recall him as a talented and unconventional educator. “You don’t have to be a genius to figure this thing out.”

Prosecutors declined to comment on his case, as did Sabrina Shroff, a lawyer who was assigned to assist Mr. Heicklen. (He is acting as his own lawyer.)

He said his activism on nullification dated back to just after he retired in the early 1990s, when he openly smoked marijuana in State College, Pa., to get arrested as a protest against marijuana laws. For this, he was arrested about five times. Mr. Heicklen has said that he otherwise does not smoke marijuana.

Around the same time, he learned about a group called the Fully Informed Jury Association, which urges jurors to nullify laws with which they disagree. Mr. Heicklen, of Teaneck, N.J., said he distributed the group’s materials as well as his own.

“I don’t want them to nullify the murder laws,” he said. “I’m a big law-and-order guy when it comes to real crime.”

But, he said, there were other laws he wanted to nullify, like drug and gambling laws.

“This is classic political advocacy,” Christopher T. Dunn, associate legal director of the New York Civil Liberties Union, said of Mr. Heicklen’s pamphleteering. “Unless the government can show that he’s singling out jurors to influence a specific verdict, it’s squarely protected by the First Amendment, and they should dismiss the case.”

But Daniel C. Richman, a former prosecutor who teaches criminal law at Columbia, said there was an interest in ensuring the integrity of the jury process. “The government has to walk a fine First Amendment line bringing these charges,” he said, “but lawless jury behavior is certainly of concern to it, too.”

Mr. Heicklen says that when he stands outside the court, he holds a sign that reads “Jury Info” to draw people to him. “Sometimes they think I’m official,” he said. He answers questions and advises that jurors have the right to nullify.

Jessica A. Roth, a Cardozo law professor and a former prosecutor, said such activities could confuse and mislead jurors, since “the information he’s giving these people is likely to be in direct conflict with the instructions they will receive from a judge if they are jurors in a case.”

Mr. Heicklen, a Cornell graduate, taught for more than 20 years at Penn State, where he was a faculty member known for his innovative methods, former colleagues said.

Mr. Heicklen would bring Penn State dancers, actors and cheerleaders into one course to illustrate molecular vibration and to celebrate scientific discovery. “People talked about this course for years,” Robert Bernheim, a retired professor, recalled.

Barbara J. Garrison, who heads the Penn State chemistry department, called Mr. Heicklen “an enormously creative scientist” who “really liked to think outside the box and sometimes that meant that he ran counter to the establishment.”

In case you don't know exactly when a jury can use nullification, here is a little discussion about it:
 
Juries clearly have the power to nullify; whether they also have the right to nullify is another question.  Once a jury returns a verdict of "Not Guilty," that verdict cannot be questioned by any court and the "double jeopardy" clause of the Constitution prohibits a retrial on the same charge.

Early in our history, judges often informed jurors of their nullification right.  For example, our first Chief Justice, John Jay, told jurors: "You have a right to take upon yourselves to judge [both the facts and law]."  In 1805, one of the charges against Justice Samuel Chase in his impeachment trial was that he wrongly prevented an attorney from arguing to a jury that the law should not be followed. 

Judicial acceptance of nullification began to wane, however, in the late 1800s.  In 1895, in United States v Sparf, the U. S. Supreme Court voted 7 to 2 to uphold the conviction in a case in which the trial judge refused the defense attorney's request to let the jury know of their nullification power.

Courts recently have been reluctant to encourage jury nullification, and in fact have taken several steps to prevent it.  In most jurisdictions, judges instruct jurors that it is their duty to apply the law as it is given to them, whether they agree with the law or not.  Only in a handful of states are jurors told that they have the power to judge both the facts and the law of the case.  Most judges also will prohibit attorneys from using their closing arguments to directly appeal to jurors to nullify the law.

Recently, several courts have indicated that judges also have the right, when it is brought to their attention by other jurors, to remove (prior to a verdict, of course) from juries any juror who makes clear his or her intention to vote to nullify the law. 

 
This is a troubling aspect of this topic.  The courts are NOT the final arbiter, the PEOPLE are.  They should be told of this option.  To prohibit a defense attorney from using this information is a crime and a sign of tyranny.  Since when is a judge the be all, end all?  This guy was only informing people about an action which they could legally take.  How can that land you in jail in a just country? 
 
It comes back to the money interests.  They want to control the sheeple and limit their actions.  This leads to predictability, and that's what the elite want.  No surprises.  This next article is NO surprise to anyone who follows these snakes:
 

Too Big To Fail?

Bloomberg Government’s Cady North uncovers that the biggest banks are even bigger post financial collapse, TARP, and implementation of Dodd-Frank law.

The banks originally deemed “too big to fail” when Congress passed TARP have only gotten bigger in the last few years, and are expected to get even bigger in the years to come.

According to data compiled by Bloomberg Government, “the largest banks have grown larger since the financial crisis, and the number of ‘too big to fail banks’ will increase by 40 percent over the next 15 years.”

Today, the top 10 banks hold 77 percent of all U.S. bank assets, compared with 55 percent of the total assets in 2002.

Furthermore, the Bloomberg Government study(subscription required) reports that assuming current growth in the financial sector, each year more banks will be designated as risky under the Dodd-Frank law. As of December 2010, there were 35 banks with $50 billion or more in total assets; that number could increase to 48 within 15 years.

 
 
Back in 2008 when Paulson and crew held a gun up to the heads of congress and said give us hundreds of billions of dollars or else, the system was going to be changed to avoid this concentration, right?  Too big to fail, was going to be changed.  What happened?  Exactly what the elite wanted to happen, more concentration.  This means, they win, we lose, every time.  Until the Federal Reserve is abolished, and the U.S. has had central banks before which were abolished, this doesn't have much chance of changing.  
 
In that vein, and continuing to show the complete control of our system that the big banks have, here is an unbelievable development in the silver market:
 
JPMorgan Holding 30,844 Ounces of Silver for Clients

2011-03-24 19:05:17.451 GMT

March 24 (Bloomberg) -- JPMorgan Chase & Co., which accepts physical gold as collateral for trading securities, has become a custodian of Comex silver inventories, according to the owner of the New York exchange.

JPMorgan became a depository on March 17, according to Chris Grams, a spokesman for Comex owner CME Group Inc. The bank had 30,844 ounces of silver eligible for delivery as of March 22, exchange data show. Total holdings in Comex-monitored warehouses were 104.27 million ounces.

Silver prices have more than doubled in the past year and gold reached a record today as investors bought precious metals as a hedge against inflation and turmoil in financial markets.

New York-based JPMorgan said last month it expects to accept additional precious metals and commodities as collateral later this year.

"This is further indication that gold and silver are being treated more like a currency," said Matt Zeman, a market strategist at Kingsview Financial in Chicago.

Silver futures for May delivery rose 17.7 cents, or 0.5 percent, to settle at $37.375 an ounce at 1:51 p.m. on the Comex, after touching a 31-year high of $38.18. The price reached a record $50.35 in 1980.

JPMorgan has also been authorized to hold gold, platinum and palladium for delivery against precious metals contracts traded on the Comex and Nymex, according to Grams, the exchange spokesman.

Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to comment on the inventories.

 
Why is this significant?  Here is a nice concise description from GATA:
 
It was announced 10 days ago that JPM was approved by the CME to operate a Comex metals storage vault. While on the surface this is no big deal, the manner in which JPM managed to get around the full review process has raised a lot of knowledgeable eyebrows in the precious metals market, especially in the context that JPM - by far - has the largest short position in paper silver in the universe, in addition to also having the largest proprietary position in OTC gold and silver derivatives. Again, both states of existence would be no big deal as long as the world could verify with its own eyes that JPM actually has the ability to deliver the underlying physical metal represented by the firm's absurdly massive short position. That is the crux of the problem. Show me the metal you can deliver and feel free to make markets and short away. Otherwise there needs to legally enforced scrutiny. The CME, with its hastened approval of JPM as a vault operator has demonstrated that it is unwilling to enforce legal scrutiny. Furthermore, The JPM Comex vault news tells us all we need to know about the extent to which the bullion banks and their mafia inside the regulatory agencies and even the oval office (Obama's new chief of staff is an ex-JPM guy) will go to fight their problem with precious metals.

Operating a gold and silver vault will now enable JPM to exploit the fact that most metals players who take delivery of their metal typically let it remain at Comex vaults for safekeeping. Again no big deal, because it is convenient and saves delivery fees,
as long as the owners of the metal hold the vault operators accountable. In other words, if more players stand for delivery than JPM has available to actually physically deliver, JPM can just notify the owner that delivery has been made to its vault without ever having to make the actual delivery unless the owner asks for delivery into a private depository off the Comex. It has long been suspected that all of the current vault operators, especially HSBC and Scotia, engage in this "fractional" bullion banking scheme, but now that JPM has entered the vault storage game, there is no doubt in my mind that the Comex is running low on deliverable metal.
 
As a quick summary, JPM now has the ability to commit fraud with silver bullion for which they are a custodian in the largest silver ETF.  This, and the regulators grant the ability in record time!  If you think there is a lot of metal out there, you're delusional.  Silver will trade for many multiples of where it is now.  I believe that it has risen very fast recently, so I wouldn't be buying a lot right now.  I would wait for a pull back.  That fits in with the old adage to "buy the dips."  This ties right in with my next topic, calm investing. 
 
Buying the Calm
 
I thought I'd take some time to talk about a topic that is not very well known outside technical traders.  The worst time to buy a stock is when it is screaming higher and yet most fall prey to greed and do just that.  The best time to buy a stock that has good prospects is when it is down.  Obviously, that is VERY difficult to do as the human fear gene kicks in and forbids it.  To buy things that are sinking goes against human nature.  The other best time to purchase, that not many talk about is during a "boring" time.  Currently both of my biggest holdings, Mexus Gold and Gold Resources, are in just such a time.  Both have been "range bound" for the last 4 or 5 months, which means selling between two prices.  Here is Mexus:
 
 
Since the beginning of December, the stock has been stuck in a trading range around 25 cents.  What this does is flush out those buyers who bought under a dime and replaces them with buyers who paid 25 cents.  What this means is that a move to 30 thirty cents is much more likely to hold because we have less people with very large gains which makes them want to sell.  People who bought at 5-9 cents are much more likely to sell at 30 cents than those who bought at 25. 
 
So if you have been thinking about buying these stocks, now is a good time.  Sooner or later this calm will end and I believe a repricing of both of these stocks will occur to the upside.  Don't wait for the spike, buy now while it's easy.  As I mentioned above, I would not advise buying silver right now as it has been skyrocketing, and a lot of people are talking about it.  Very few ride the wave of a great stock all the way up, because they sell during these "boring" times or on violent pull backs.  Don't act like everyone else, buy when it's calm.
 
Positions
 
Goro  (closed at $26.00, up $.70, average price paid, $6.10)
 
Since I just recommended buying the calm, I thought I'd share some analysis of just how profitable GORO could be.  Here is an excerpt from the private GORO Yahoo bulletin board from a very knowledgeable guy:
 
Here's the value of the last reported Baja intercepts using the
assay reported on February 22.

28.6 meters of 21.64 g/t gold, 2178 g/t silver, 1.84% copper, 1.79%
lead, 4.94% zinc
Value of gold = $1,578
Value of silver = $2,147.90
Value of copper = $124.39
Value of lead = $25.06
Value of zinc = $118.02
Value of precious metals = $3,725.94
Value of base metals = $267.47
Total value = $3,993.41 per tonne.

They would recover maybe 90% of this on average.
 $3,993.41 x .90 = $3,594
 This would be further reduced by smelter discount and NSR. Figure 35% discount.
 $3,594 X 0.65 = $2,336

Figure another $100 off for mining and milling.
$2,336 - $100 = $2,236 / tonne free cash flow.

$2,236 X 500t/d = $1,118,072 per day.
Assume 328 days (90% up time).

328 X $1,118,072 = $366,727,616 per year free cash flow
This would translate to $6.92 per share in free cash flow.

It should be noted that we have no idea how much of this ore they have.
Let's hope they have a lot...;-)
Rival
 
Now where things get REAL interesting is if they up the mill production to the current capacity of 1500 tons a day.  Let's run some more numbers using a dividend percentage of 2:
 
500 tons per day   free cash flow  $6.92 -   dividend  $2.31  -  @ dividend pay out of 2%  -  target price  $115
 
1000 tons per day   free cash flow  $13,84  -  dividend  $4.62  -  @ dividend  pay out of 2%   -  target price $230
 
1500 tons per day   free cash flow  $20.76  -  dividend $6.93  -  @ dividend pay out of 2%  -   target price $345
 
Obviously, the ore may not be as rich as this, but even if it were 33% as rich, the target prices are still $38, $76, and $114.
 
Currently GORO is being valued at a dividend pay out of 1.4%.  If that rate is applied, the target number jumps by over 40%. ($165, $330, $495)  As you can plainly see, GORO is still very undervalued....buy the calm!!!  
 
This is the kind of data you can get from the private Yahoo Board.  Free to join, you just have to email a request.
 
 
Another interesting aspect of GORO is the number of Institutional holders.  Here is the latest list with shares from 12/31/10 with each column showing:  holder, date, shares, shares added or sold, % change, and value in thousands:
 
 
HOCHSCHILD MINING PL... 12/31/2010 14,626,874 - - $380,299
TOCQUEVILLE ASSET MA... 12/31/2010 4,638,976 3,713,600 401.31% $120,613
BLACKROCK GROUP LTD 12/31/2010 2,253,286 (514,610) (18.59%) $58,585
ALLIANZ GLOBAL INVES... 12/31/2010 1,213,351 1,213,351 New $31,547
OPPENHEIMER FUNDS IN... 12/31/2010 1,026,365 539,465 110.80% $26,685
 
KING LUTHER CAPITAL ... 12/31/2010 100,000 0 0.00% $2,600
SUSQUEHANNA INTERNAT... 12/31/2010 99,352 99,352 New $2,583
GAMCO INVESTORS, INC... 12/31/2010 85,000 0 0.00% $2,210
RAYMOND JAMES & ASSO... 12/31/2010 74,500 16,800 29.12% $1,937
BIG 5 ASSET MANAGEME... 12/31/2010 73,888 - - $1,921
BLACKROCK JAPAN CO. ... 12/31/2010 69,879 (4,457) (6.00%) $1,817
GOLDMAN SACHS GROUP ... 12/31/2010 69,423 69,423 New $1,805
UBS AG 12/31/2010 52,782 42,588 417.78% $1,372
PUPLAVA FINANCIAL SE... 12/31/2010 43,800 43,800 New $1,139
WEXFORD CAPITAL LP 12/31/2010 42,300 (13,600) (24.33%) $1,100
RAYMOND JAMES FINANC... 12/31/2010 40,885 (3,035) (6.91%) $1,063
WELLS FARGO & CO/MN 12/31/2010 24,150 24,150 New $628
INVESCO LTD. 12/31/2010 22,000 6,500 41.94% $572
ROYAL BANK OF CANADA... 12/31/2010 20,000 (1,350) (6.32%) $520
KANALY TRUST CO 12/31/2010 15,400 (2,000) (11.49%) $400
HARRISON WALTER F II... 12/31/2010 15,000 (44,100) (74.62%) $390
FRANKLIN RESOURCES I... 12/31/2010 14,000 (986,000) (98.60%) $364
ALPHABET MANAGEMENT,... 12/31/2010 12,613 12,613 New $328
BLB&B ADVISORS, LLC 12/31/2010 12,000 0 0.00% $312
NORTHERN TRUST CORP 12/31/2010 10,606 10,606 New $276
 
I left off the last page as the holders get pretty small.  I just wanted you to see the diversity of holders.  Remember that GORO doesn't have a compliant resource, meaning that they haven't checked all the boxes for having a "standard" estimate of ounces in the ground.  That there are still so many holders, gives you an idea of how compelling the property and company are to investors.
 
 
Mexus Gold  (closed $.24, down $0.01, average price paid, $.20) 
 
Stocks    (Current status, OUT, sold on March 18)
 
Physical Gold  (Closed $1,427,  up $7,  average price paid $395)
 
Physical Silver  (Closed $37.24,  up $1.96,  average price paid $5.31)
 
This week's video is for anyone who says, "I can't."  Have a great week!