Silver: Victim of Motive, Means, and Opportunity
Silver gets small respect, though that is essential in a universe dominated by paper resources and fake values. Similar to a murder investigation, let’s inspect a motive, means and event used to “manage” china prices.
MOTIVE: The cost of china is critical to industrial users, given there are thousands of uses for silver, many of that have no choice solely silver. If a cost of china rises too rapidly, people notice. Worse, a cost convene in china almost will widespread to a bullion market, that is watched globally by banks, institutions, and people. A quick rising cost of bullion informs a universe that executive banks are “printing” to excess, governments are formulating too many debt, and a financial chosen are mismanaging by “skimming” too many from a tellurian economies. A rising bullion cost is worrisome to many.
Obviously, a cost of bullion and china contingency be “managed” so that certainty in paper currencies, executive banks, and governments is maintained. We know that executive banks intentionally amalgamate their currencies, though they wish a routine to sojourn slow, deliberate, and mostly unseen. Hence, executive banks, governments, and a financial chosen have a clever ground for handling a cost of china and gold.
MEANS: The annual value of all china cave outlay is maybe $15 Billion. By contrast, a US supervision increases a central debt by that many in reduction than a week. Comparatively speaking, a china marketplace is tiny. Therefore a means to float or vanquish a marketplace is both simply accessible and clear. A few $Billion can expostulate COMEX prices distant aloft or reduce quickly, generally if “the managers” use futures contracts during illiquid times in a overnight market. Andy Hoffman has extensively documented this process.
OPPORTUNITY: The futures markets are open 250+ days per year. The china marketplace is also open though illiquid about a same series of nights per year. That alone provides plenty event for cost termination or levitation as indispensable by a financial elite. Additionally china is traded in London and can be “trashed” or hyped in a media. The event to “manage” prices is clearly available.
HIGHER AND LOWER:
Management is not singular to pulling prices lower. Look during a 40 year record scale draft of silver. Clearly prices increasing almost between 2001 ($4.01) and Apr 2011 (over $48). Subsequent to that vast convene china prices crashed next $15 in Jul of this year.
- Silver prices spend many of a time relocating small and then, for a brief time, pierce too distant and too fast, both adult and down.
- The moves adult are some-more fun for those of us who know a value of silver, a counter-party risk of many paper assets, and a dangers of debt formed fiat currencies. But down moves are opportunities.
- Crashes occur: Japanese genuine estate, china after 1980, a NASDAQ in 2000, genuine estate in 2008, Enron stock, and a few domestic reputations. Managed crashes can be rarely essential for a financial chosen and dear to a bottom 95% of a public. Expect some-more crashes, some-more often.
- In my opinion, one of a best ways to daunt china investors is to run a cost up, hype it all a way, massively sell futures brief nearby a top, “encourage” a COMEX to boost margins, and float a cost fall down. Retail investors typically come into a marketplace late, float it up, feel overjoyed until a crash, get out too late, and then, after outrageous losses, swear they will NEVER demeanour during china again. This routine works good for a banks – such as in 1980, 1987, 2008 and 2011. If a convene and pile-up happens each decade or so, a new organisation of sell investors can be roped in, fleeced, and disheartened per silver.
- Silver prices are approximately triple what they were a decade ago, though are down 70% from their 2011 highs. Sentiment is bearish after 52 months of disappearing prices.
- If china had solemnly risen from underneath $10 in 2008 to $15 today, nobody would be excited, though a pervading disastrous view would almost be absent. The too far, too quick convene and successive pile-up succeeded in abrasive sentiment. Not coincidentally given 2011, a dollar and holds have rallied, and a SP reached all-time highs. Real resources down, paper resources up! There is process to this madness.
But stupidity it is – paper resources formed on fiat currencies pile-up each 7 years or so – and they are due for another composition reduce to compare their underlying value. Similarly, china is due for an composition many aloft to recover a underlying value.
Courtesy: Gary Christenson – The Deviant Investor