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Thinking Silver? Talk To The Gold-Bugs

Articles & Blogs - Silver Commentary

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It is a reality of life that those investors who favor gold (and silver) as their preferred asset-class need to have ‘thick skins’. On aggregate, Western investors are holding roughly 1/10th the amount of gold and silver which they have held (in similar circumstances) in the nearly 5,000 years since we first began refining “good money.”

Strip away the “gold bugs” however, the less-than-5% of the general population who hold virtually all of our gold (and silver); and the Average Investor (in Western societies) is only holding approximately 1% as much bullion as in any similar circumstances, in the thousands of years since we first began refining these metals.

This absurd level of under-ownership comes despite the twelve consecutive years of rising gold prices, a statistic unmatched by any other asset class. Obviously “it’s lonely at the top.”

While the Corporate Media have engaged in an endless stream of juvenile scare-tactics to try to frighten people away from the world’s best-performing asset class, probably the most defamatory of these attacks is the continual insistence that gold-bugs are Zealots – who worship gold like a “religion.”

There are many ways to rebut such a ridiculous smear, however perhaps the best way to do so occurred to me while attending a recent international resources conference in Vancouver. As always, the “gold bugs” featured prominently in this conference.

The commodities professionals who put together such shows first of all recognize the best-performing class of commodities (and all assets) when they see it. Secondly, they understand that the much-maligned gold-bugs can be counted on to provide the most interesting and insightful presentations among all of their speakers. It was thus no surprise to see the executive group of the Gold Anti-Trust Action Committee (more commonly known as “GATA”) being asked to once again share their knowledge with the attendees of this conference.

It was Chris Powell of GATA who actually inspired my own (minor) epiphany, when he first reminded us of yet another of the scurrilous accusations hurled at the gold-bugs by the mainstream media: that they (we) all are “nothing but a bunch of conspiracy theorists.” He then pointed out that in reality GATA was purely-and-simply a non-profit information-gathering entity; who does its research and present its facts to their large-and-growing global audience.

This was not mere assertion. The Gold Anti-Trust Action Committee then went on to demonstrate the truth of that statement by spending most of their allotted time talking about silver. This is not the behavior of zealots. You won’t hear devoted Christians saying that while “their god” is good, if you want to see “a really great god” in action you should follow Buddha.

Zealots, by definition, are unwavering believers in their own dogma. Yet not just with GATA but with most of the “community” of gold-bugs, we hear these individuals asserting one-after-another that the real story here is in the silver market.

Understand that the enthusiasm these individuals have for the gold market has not wavered in the slightest. Indeed, for numerous, fundamental reasons the gold-bugs are more optimistic about the future of gold than ever. Put another way, these analysts are more pessimistic than ever about the speed with which our servile governments are destroying our economies.

More than anything, gold-bugs are “detectives”: seekers of the Truth, in a world where the Corporate Media bombard us with a deluge of fear-mongering and outright lies to attempt to ward-off investor dollars from entering this sector. Remember all the years that these Liars attempted to dismiss gold as a “barbarous relic”?

That lie had to be abandoned. In fact, gold never ceased being treated as “money” by the same cabal of international banking which produces all of our debauched, “fiat currencies”: the central banks. However, it was only after the world’s premier Gold Haters were forced to abandon their relentless gold-dumping (because they ran out of gold), and suddenly flip-flopped and began buying gold at the fastest rate in history that the Corporate Media finally jettisoned this absurd lie.

 

It was GATA’s Ed Steer who produced perhaps the single, most-damning piece of evidence at the conference: a chart showing the extreme, historically unprecedented, and grossly disproportional short positions which exist in these commodity markets.

[courtesy of analyst Nick Laird]

The point to note here is that not only do the precious metals short positions dwarf the shorting of virtually all of the world’s other commodity markets, but this massive shorting occurs in generally tiny markets.

The largest of these precious metals markets – the gold market – is still a relatively small commodities market. However, take away 90% of the “trading” which is just international bankers engaging in currency swaps; and the gold market becomes a tiny market as well.

In other words (in proportionate terms) we’re not talking about these short positions being a mere order of magnitude larger than other short positions in the world of commodities (i.e. ten times as large), but more like one hundred times larger than the average short positions of other commodities. Short positions which are blatantly criminal in nature.

At the end of the 1970’s, the infamous Hunt Brothers accumulated a massive (long) position in the silver market. They were subsequently investigated, charged, and convicted of an anti-trust violation: attempting to manipulate the silver market.

By Ed Steer’s best estimate, JPMorgan’s short position – by itself – now comprises half of the mammoth short position indicated on the previous chart. This massive, permanent concentration (on the short side) is significantly larger than the size of the crime committed by the Hunt Brothers.

The feeble justification offered by JPMorgan is that it is “hedging” in the silver market. Right. After the price of silver had been driven to – i.e. manipulated to – a 600-year low in real dollars, what exactly was JPMorgan hedging against? That the price would go still lower? That the price of silver would go still lower when there were more new patents for silver than any other metal, and previous suppression of the silver market had already caused inventories to collapse by 90%?

When an entity enters a market with prices already near a 600-year low, and inventories already collapsed (and with demand strong), and then buries that market under the largest short position (in proportionate terms) in the history of human commerce; it shouldn’t require one of the gold-bug Detectives to explain what is taking place here.

Any reader with the slightest understanding of market fundamentals knows that with any market where prices are at an historic low and inventories have been completely obliterated that there is only one direction in which prices can possibly go: up. Thus unless the “commodities experts” at JPMorgan wish to insist that they are entirely ignorant of the most-basic of market fundamentals; we can only conclude that their massive, permanent short position in the silver market is nothing more than the world’s most-obvious price suppression scheme.

There are countless fundamentals reasons why precious metals analysts continue to favor their asset class. For those investors still unfamiliar with the silver market because they have been frightened off by the serial fear-mongering of the mainstream media; it’s not too late.

The price-manipulation of the silver market means that prices are still at bottom-feeding lows. Inventories are still obliterated. There is still only one possible direction in which silver prices can go. And if you want to become a real “expert” on this market, start delving into the facts uncovered by the Gold-Bug Detectives.

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Jeff Nielson
...
written by Jeff Nielson, January 29, 2013
As for me, I applaud central bankers the world over.
I would also like to take this opportunity to give a big thumbs up to JP Morgan.

Without these guys, I wouldn't be able to keep accumulating silver at these rediculously low prices.
My only fear is the imposition of government controls and the taxation of bullion sold at an absurdly high rate as "windfall profits" when TSHTF.

Meanwhile, keep up the good work, guys.



Bobbbny what you just described is the attitude of the Big Buyers. And try as I might, I simply cannot get most of us Small Buyers to think the same way. More is the pity, as adopting this attitude removes most of the frustration from this constant manipulation. smilies/wink.gif
bobbbny
...
written by bobbbny, January 28, 2013
As for me, I applaud central bankers the world over.
I would also like to take this opportunity to give a big thumbs up to JP Morgan.

Without these guys, I wouldn't be able to keep accumulating silver at these rediculously low prices.
My only fear is the imposition of government controls and the taxation of bullion sold at an absurdly high rate as "windfall profits" when TSHTF.

Meanwhile, keep up the good work, guys.
Jeff Nielson
...
written by Jeff Nielson, January 26, 2013
I went "window shopping" and the big suppliers, are on spot, 10% mark up (you do have shipping, processing fees)). The "local" dealers are in line with them price wise (with calls I made). Higher commission, but there line is "you pay more after shipping". Buying local is always my first choice.
The "big boys" have a lot of "out of stock and reserve order".

This is the most "out of stock I've seen. "Maples" from a Texas outfit.

I'm just a little concerned in the context of being led into a barrel.
I've learned to question the obvious.

Maybe, even more price suppression ???



Earl, I don't think anyone is suggesting that TODAY (and at current demand levels) that the U.S. and Canadian Mints are "unable" to get their hands on enough silver to satisfy demand -- without regular supply bottle-necks.

This is a stalling tactic to mute demand, precisely by driving up the PREMIUMS which retail customers need to pay. It doesn't change the dynamics, merely stretches out D-Day (with "D" signifying default)... smilies/wink.gif
Earl
...
written by Earl, January 26, 2013
Jeff,

I went "window shopping" and the big suppliers, are on spot, 10% mark up (you do have shipping, processing fees)). The "local" dealers are in line with them price wise (with calls I made). Higher commission, but there line is "you pay more after shipping". Buying local is always my first choice.
The "big boys" have a lot of "out of stock and reserve order".

This is the most "out of stock I've seen. "Maples" from a Texas outfit.

I'm just a little concerned in the context of being led into a barrel.
I've learned to question the obvious.

Maybe, even more price suppression ???

Just looking out the window and relaying what I see. For myself it's on sale regardless. Just weird picture being presented to the public.

Earl




Jeff Nielson
...
written by Jeff Nielson, January 25, 2013
Just so I really understand this JP Morgan shorting position.....
JPM has a substantial holding (paper and real) in the silver market. To keep the market suppressed, they have to keep issuing paper certificates tied to the real silver in their possession. So they are using silver in a fractional reserve kind of way. So, what is to stop them issuing paper (with multiple paper ownership of the same bars) for ever? Nothing, unless we have a run on the real silver market with everyone demanding physical delivery. How close are we to that happening?

Scams generally seem "stable"...until the day BEFORE they collapse. smilies/wink.gif
Are we more likely to have a £$ run on the Main Street banks before we get to a silver (or gold)


Norbull, first dealing with the first part of your question; any/all scams and Ponzi schemes get more and more unstable as they get larger -- as a proposition of both arithmetic and human nature.

ANY scam will distort markets in some way. As the scam grows, and the distortion grows, STRESSES don't increase in a linear manner, but rather exponentially.

Think of JPMorgan's silver scam as a HUGE (and growing) house-of-cards, and think of a silver default as a hurricane. YES, the hurricane would/will certainly destroy the house-of-cards, but as that house of cards gets larger and larger it gets so unstable that even a slight breeze will be sure to collapse it.
Norbull
...
written by Norbull, January 25, 2013
Great article Jeff.
Just so I really understand this JP Morgan shorting position.....
JPM has a substantial holding (paper and real) in the silver market. To keep the market suppressed, they have to keep issuing paper certificates tied to the real silver in their possession. So they are using silver in a fractional reserve kind of way. So, what is to stop them issuing paper (with multiple paper ownership of the same bars) for ever? Nothing, unless we have a run on the real silver market with everyone demanding physical delivery. How close are we to that happening?
Are we more likely to have a £$ run on the Main Street banks before we get to a silver (or gold) run?
Jeff Nielson
...
written by Jeff Nielson, January 24, 2013
Should any of this be surprising considering we, here in the US, have an intentionally impotent SEC? A MSM in simpathatico with a desperate, socialist administration? A Kenisian FED out of ammo, printing a hurricane of fiat for its bank masters? Global race to debase? I think not.



Xploregon, while the words vary; the sentiment/question you have expressed is one that I hear (and experience - lol) on a regular basis: am I the only, sane person (or one of a very few) remaining -- in a world gone totally insane?

It's precisely because the corruption is so obvious and our entire economic paradigm so transparently absurd that I go beyond mere "herd behavior" in my writing and speak of (literal) brainwashing.

Herd behavior can only explain a certain level of apathy and oblviousness to reality. However, to continue to believe in the totally Orwellian/Machiavellian mythology peddled by the Establishment explicitly implies a level of mass-stupidity which goes beyond mere "herd behavior" into the realm of the lemmings.

And since we are NOT lemmings, I can only conclude that mass-brainwashing is at work here. smilies/wink.gif
Jeff Nielson
...
written by Jeff Nielson, January 24, 2013
Jeff: I'd appreciate your take on the following thought: I have monitored prices at various coint dealers over the past year and have noticed that the premiums for generic rounds and bars have more than doubled and that at my local shop there is a premium on junk silver whereas in the last two years you could all you wanted at spot. To me, these observations indicate a growing shortage, obviously which cannot be reflected in the suppressed price.


Apberusdisvet, this is PRECISELY why I try to be encouraging/supportive of reader comments. There is only so much I can "monitor" myself (without driving myself insane), and so I consider such anecdoctal feedback to be invaluable.

Having NOT noticed this (yet) myself, I would certainly support your reasoning. As a matter of basic market dynamics, when supplies are (relatively) abundant, we see a much greater spread in premiums -- as buyers are SELECTIVE of the type of silver product they purchase.

However, as any WORRIES about supply begin to filter into the psyche of buyers; then suddenly all that people are concerned about is getting "silver" -- and the premium-differentials would vanish.

Obviously we don't yet have enough data to reach any CONCLUSION here, but this is certainly an area worth watching closely -- and I look forward to your next "report"... smilies/smiley.gif
Jeff Nielson
...
written by Jeff Nielson, January 24, 2013
Consider that JPM's take over of the Bear Sterns' silver short position was/is at the direction of the money changers, who now direct and control the US Treasury, and the US Gov't, for the sole purpose of maintaining the Strong Dollar Policy, and you see another tool. JPM is now only the latest tool of the money changers. Are they now selected for extinction, just as Bear Sterns? How long can they manage the losses caused by this directed policy?



Yes Jeanna, you're quite right that the Bear Stearns take-down was an act of "culling the herd" -- so that the Survivors could get even fatter.

The PROBLEM for the Bank Oligarchs now, however, is that it is a "mighty small herd" (lol). Indeed, the Evil Twins (Goldman Sachs and JPMorgan) consider themselves to BE "the U.S. financial system".

Thus we obtain our best guidance from the (low-budget) "Dracula" movies. It's quite common to see Dracula's WIVES get a stake-through-the-heart at some mid-point in the movie. However Dracula HIMSELF never gets "staked" until the last 5 minutes of the movie.

The day we ever see a JPMorgan or Goldman Sachs "sacrificed" will be the day BEFORE the whole system comes to an end... smilies/wink.gif

Xploregon
...
written by Xploregon, January 24, 2013
Jeff- As always, a great article. Should any of this be surprising considering we, here in the US, have an intentionally impotent SEC? A MSM in simpathatico with a desperate, socialist administration? A Kenisian FED out of ammo, printing a hurricane of fiat for its bank masters? Global race to debase? I think not. BTFD.
apberusdisvet
...
written by apberusdisvet, January 24, 2013
Jeff: I'd appreciate your take on the following thought: I have monitored prices at various coint dealers over the past year and have noticed that the premiums for generic rounds and bars have more than doubled and that at my local shop there is a premium on junk silver whereas in the last two years you could all you wanted at spot. To me, these observations indicate a growing shortage, obviously which cannot be reflected in the suppressed price.
Jeanna
...
written by Jeanna, January 24, 2013
Excellent points, Jeff. Consider that JPM's take over of the Bear Sterns' silver short position was/is at the direction of the money changers, who now direct and control the US Treasury, and the US Gov't, for the sole purpose of maintaining the Strong Dollar Policy, and you see another tool. JPM is now only the latest tool of the money changers. Are they now selected for extinction, just as Bear Sterns? How long can they manage the losses caused by this directed policy?

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