Ron Paul has long opposed the concept of central banking and whenever the chairmen of the Federal Reserve System, the central bank of the United States, have had to testify before House congressional committees, Ron Paul has been a thorn in the sides of the Fed Heads. Ron Paul’s tête-à-têtes with former Fed Head Alan Greenspan became legendary.

Now, Ron Paul is going head to head (pun intended) with Ben Bernanke, Greenspan’s successor. With Ron Paul being the ranking member of the Domestic and International Monetary Policy, Trade and Technology subcommittee, before which Fed Heads are required to testify twice annually, Greenspan’s appearances become scheduled debates between the world’s biggest advocate of paper money and the Congress’ most knowledgeable critic of paper money.

With Greenspan, however, the confrontations were mostly reported by the print media and the public benefited little by sparse—and usually condescending—coverage of Ron Paul’s calling the Fed Head on the carpet. The media’s ridiculing of Ron Paul’s questions was based on this: why should the world’s most brilliant economist have to answer policy questions from a doctor from rural Texas? With Bernanke, however, things have changed.

Not fair and more balanced coverage, we don’t get that. Things are different because of technological advances. Ron Paul’s challenges to Bernanke are videoed and put on Youtube for the entire world to see. Take a look at the February 27 hearings. About five minutes.

If you have not set up your computer to view Youtube types of videos, install the necessary software, which is free. Youtube, and other sites, provide the means to break the Establishment’s control of what we see, hear and learn. Ron Paul’s taking Ben Bernanke to task is an excellent example.

Kitco.com, which is renown among gold and silver investors for feeding to the Internet precious metals spot prices, recently posted this notice on its site:

Metal price changes are now based on closing prices at 5:15 PM NY time Mon-Fri.

The notice has caused some confusion on the part of many precious metals investors and deserves clarification of just what it means.

The header at the top of Kitco’s All Metals Quote page reads New York Spot Price, which suggests that the prices come from New York. They do not. The prices are fed from the Chicago-based Globex Exchange, which is an Internet trading platform. The Globex is owned by the Chicago Mercantile Exchange (CME), the world’s largest commodities futures exchange.

However, The New York-based COMEX is the best-known exchange among gold and silver investors because that is where gold and silver have traded for decades. When investors think New York Spot Prices for gold and silver, they automatically think that prices are coming from the COMEX. But, from Kitco’s site, gold and silver prices are coming from the Chicago-based Globex Exchange.

The 5:15 PM NY time adds to the confusion because gold and silver investors have long known that the New York market closes at 1:30 p.m. EST. (Actually, gold closes at 1:30 p.m., EST, and silver at 1:25 p.m.) So, what’s with the 5:15 PM NY time to which the Kitco site refers?

The Globex trades Sundays through Thursdays from 6:00 p.m. EST to 5:15 p.m. EST the next day. So, 5:15 p.m. EST is a closing time for the Globex, but the COMEX still closes at 1:30 p.m. EST (silver at 1:25 p.m. EST), and the COMEX remains an important futures exchange for the trading of gold and silver despite growing importance of the Globex. The COMEX is an “open outcry” exchange where live traders execute orders for customers and for themselves. The Globex is an Internet exchange where trades are effected by traders using computers, such as the one on which this blog post is being written. The Globex is very impersonal while the COMEX requires dealing with persons. In time, the COMEX, I suspect, will go the way of the dinosaurs. However, the COMEX will not go away without a fight for it is a cash cow for the COMEX traders.

Of no significance, one page on the Globex website calls the 5:15 p.m., a “closing,” while another page says that there is “a 45-minute break each day between 5:15 PM and 6:00 PM.” Regardless of whether 5:15 p.m. represents a “close” or a “break,” the Globex does not trade between 5:15 p.m. EST and 6:00 p.m. EST, Mondays through Thursdays. In effect, gold and silver trade on the Globex nearly 24 hours a day, except weekends.

Do not confuse the Globex, a futures exchange, with the spot market, and think that you cannot buy and sell gold or silver while the Globex is not trading. The products that CMI Gold & Silver buys and sells are based on the spot market, which is greatly influenced by prices on the futures exchanges, but are not “controlled” by the futures prices. The spot market, also called the cash market, calls for delivery and settlement with 48 hours. The Globex is a futures exchange with delivery and settlement “in the future,” depending on the contract month. The spot market operates anytime a dealer will quote a price. The spot market is definitely open while the Globex is closed. In fact, the spot market is open Saturdays but CMIGS is not open Saturdays.

Further, to the recipients of our Daily Prices, we will continue to email Daily Prices based on the close of the New York markets. Often, significant price changes and trading occur on the COMEX, and it remains, at this time, an important market for gold and silver.

Be reminded that our Daily Prices are “spot prices,” and not futures markets. Often we have callers wanting to know why our prices are different from price seen other places or heard on the news. I can’t say here, for I don’t know all the other sources. Sometimes, though, I know that news outlets will report “trading in New York” but not disclose whether those prices are from futures exchanges or are spot prices.

Finally, it is important to know that there is no final authority on “spot prices.” Major dealers often differ on what they call spot, but the differences are usually small. Often, though, those differences are enough that callers demand to know why our spot prices are different from Kitco’s. Our spot prices may differ from Kitco’s for two reasons.

One, we have to use the spot prices of the wholesalers who supply our coins and bars, and, frankly, those dealers could not care less what Kitco calls spot. Two, the spot prices that Kitco feeds to the Internet sites, including the “spot prices” on our 24-hour graphs, are the bid side of Kitco’s prices. See Kitco’s All Metals Quote page to see that Kitco has bids and asks for the metals it quotes.

Regardless of the small discrepancies, Kitco provides a great service to the precious metals investors by feeding its spot prices to website throughout the Internet.

Resourceinvestor.com has posted an excellent report on the proposed gold sales by the IMF.

Before anyone panics at the idea of the IMF selling gold, I would like to point out that in the 1970s both the IMF and the US Treasury sold gold while it marched to $850. Further, European central banks have been selling gold for years, and gold prices are at record highs.

Additionally, the recommendation for the sales calls for limited sales, maybe up to 400 tons and “sold in a way that didn’t disrupt the market, much like gold sold consistent with the European Central Bank Gold Agreement (EGA), which limits sales to 500 tonnes per year.”

ResourceInvestor notes that past proposals have been blocked by the US Congress, which has, because of weighted voting power, a virtual veto on any IMF gold sales. However, come January 2009, I suspect Congress will have a much more liberal makeup than it now has, and it may not block IMF gold sales, especially with promises of limited sales that are done in a nondisruptive manner.

We may have to put up with IMF gold sales in future years, but the possibility does not dampen my enthusiasm for gold (and sliver). None of the likely presidential winners has any plans to address the massive bleeding of dollars by the US Treasury.

McCain is a war candidate and has said he will continue the occupation of Iraq. McCain has never addressed the financial cost of doing so. Clinton and Obama, while saying they will end the war in Iraq, offer such potpourris of social programs that the dollar will strain under them.

With the likelihood of one of these three becoming president and major shift to the left in Congress (already 21 Republican members of the House have said they will not run for reelection.), I cannot find anything positive for the dollar on the political scene. Although IMF gold sales may turn into reality sometime in the future, I don’t worry about them at all. Investing in gold and silver makes a lot of sense for these times.

Worldwide concern about the dollar is the primary reason gold has surged to new highs this year. However, the dollar is not the only factor driving the price of gold. A shortage of electric power in South Africa, the world’s largest producer of newly mined gold, is putting downward pressure on the supply.

In South Africa, 95% of the electricity is generated by Eskom, a public utility that now cannot supply enough to meet the country’s needs. The gold mines (and the platinum mines), although South Africa’s economic lifelines because they generate the country’s export revenues, are suffering along with the South African people. Last week Eskom cut power to the mines, which resulted in an industry-wide shut down.

Eskom is between the devil and the deep blue sea.

If Eskom allocates enough electricity to the mines so that they can operate, other consumers will do without, those consumers being not only South African homes but also small businesses. That is a political nightmare for a public utility and the politicians running the country.

However, if Eskom denies the mines the needed power, jobs and export revenues will be lost, further compounding South Africa’s social problems. South Africa has one of the highest crime rates in the world.

If the mines get 50% of the power they need, they can keep the mines open but with no production. The other 50% is needed to mine. If the mines get 90% of what they need, production can be cut not 10% but 20%.

In the last few days, after much lobbying by the mining industry and its supporters, Eskom has been supplying 90% of the power the mines need, which has enabled Anglo Platinum to assert that they will be able to operate at “sustained levels” within two weeks if they continue to get the promised 90%.

Gold Fields has been in constant dialogue with Eskom since having its power needs cut to 80% and has been promised, according to a mineweb.com article, that they will receive the minimum 90% needed to produce.

But a major concern for the mines is the reliability. Can Eskom continue to supply the 90% that the mines say is the minimum needed to operate?

Further, the miners—the guys doing the work—are at great risk if the power is cut unannounced. So far, that has not happened, but it remains a possibility. The power utility previously committed to give the mines at least four hours warning before power supply was shut down or reduced.

Mining in South Africa has always been a great challenge because of the depths of the mines. An unreliable power source makes mining in South African even more challenging.

I visited South Africa in 1979 and made a two-mile vertical drop in a cage attached to a cable (Technically, it was an elevator, but not the type most Americans are used.) into the bowels of the earth where the miners worked. The temperature at the bottom would have been something like 140°F had it not been for the massive—and I mean massive—air conditioning units.

Additionally, there were the electric trains that hauled ore from miles of horizontal shafts. The use of electricity was enormous. Plain and simple: South African mines cannot operate without electricity.

The root of the problems in South Africa lies in the country’s shift toward socialism, but that is a topic for another blog post.

Meanwhile, a one would expect, South African gold shares have not done well since the problem arose. Some analysts say South Africa’s power problems cannot be solved for years. I suspect they will not be solved at all and that in time South Africa will resemble Zimbabwe, which can only be described as a cesspool.

The circumstances in South African are positive for the price of gold, but sad on a human scale. South Africa is a beautiful country with vast resources, but the country is now in the grips of socialism, which, in the ends, spreads misery among the people.