Observations of the Silver Smack Down

I am, without a doubt, positive that this past week was nothing more than a huge, coordinated, paper manipulated con. This attack was huge and powerful, but I feel will be short lived. Nothing has changed fundamentally in the physical market, in fact it has gotten more bullish. There is less physical silver on the CRIMEX and we will see how many silver shorts covered their positions soon. There is a case to be made that silver could hit the 200 day moving average at $28 but I think that this is not going to happen given the extreme nature of what we saw last week. The physical market is still tight and getting tighter still.And those that held through this attack are the strong hands that will continue to buy.

For those of you who don’t know why I have been a huge proponent of selling all paper assets and buying physical silver, this past week is why. When you are gambling/speculating/investing, you are playing in their casino. They have all of the information. They have unlimited chips to pressure you with. They can and do, change the rules in the favor of the house at any time. Buying physical silver is taking all of the chips out of the casino and starving the banksters. We are playing for keeps.

Most of you have very little idea about how this smack down could have even happened, let me break it down. First and foremost there is a physical silver market. This is a natural market that we all understand intrinsically as little children. The free market pricing mechanism reflects supply and demand. If silver is in short supply relative to the amount of money the price of silver rises. The opposite is true also. Our debt based money is a promise to pay. I heard a funny comment over the weekend, the dollar is an IOU nothing, the Euro is a who owes you nothing. In this physical silver market, you essentially trade paper assets for real assets. Real assets do not have any counter party risk and do not rely on a promise to pay to determine the value of that asset. This is why when the generational ponzi scheme break,s all paper assets will become worthless and silver will be king.

The paper futures markets are the next level up and you now are trading paper for paper. Investors go long by buying the right to take physical silver at a certain date. In recent history, investors trade the paper and have no interest in taking the physical asset. This going long is sort of be like buying a house. When you buy a house, you put a deposit down and finance the balance of the house. You do not own the house, you have an option to buy it and you are paying maintenance fee. One day you may pay off the house and take physical delivery of your house. But if the market goes the other way you can always walk away from your position. I think people get this concept also. We use leverage/DEBT to speculate a much larger position than you can buy outright with cash. We all saw in the housing bubble when people’s Adjustable Rate Mortgages reset and their mortgages doubled, it directly affected the value of all of the houses everywhere. People abandoned their homes and flooded the market with more physical homes.

In the silver market last week, the banksters reset/raised the rates 5 times in 8 days effectively doubling the cost of holding that speculative long position. Forcing more people to flood the market with selling paper claims on real silver. Buy unlike the housing bubble, there was NO INCREASE PHYSICAL INVENTORY. The CRIMEX inventory is now down to 33 million in the registered inventory. There is now over 750 million ounces of open interest in the July contract fighting over that inventory. The CME claimed that they raised the rates because they have never had a default. Well these guys know that they cannot deliver on all of the paper promises that they are selling, so they are trying to flush out all of those that would take delivery. This will not work because a little less than a billion and a half dollars buys all of the silver on the CRIMEX. China could accidentally buy that and not even notice. Hell, a couple local millionaires could buy that. There are quadrillions in paper assets and only a couple of billion in REAL silver money.  They kicked the can down the road yet again. Pretend and extend.

Here is what most people don’t really get about the silver market, shorting silver. Shorting silver on exists in the paper market. Essentially a person sells silver first and then promises to buy. Most people buy and make money when they sell at a higher price. Short sellers sell first and make money when they buy later at a lower price. This process seems totally unnatural to me but free market guys say this is necessary. I would say this is ok IF they actually sold REAL PHYSICAL SILVER into the market and contracted to buy back the REAL PHYSICAL SILVER at a later price.

The problem is that these banksters are selling the paper promise of physical silver into the market. They sell, over and over again, paper silver that they never settle or deliver REAL PHYSICAL SILVER. Naked shorting is rampant on the stock exchange and is never stopped because the big boys use it to make money. They can sell a couple of million ounces on to the paper market overnight and promise to buy at a later date. When the date comes they simply buy back and short again at a later date, kicking the can down the road. Or worse never buy back in. The 8 largest banks are net short 15o days of global silver production. This persistent short is so large and so long that there has never been a historical equivalent. To make this point blatantly obvious, there was 8 years of global Silver supply changed hands last week. 8 billion ounces of paper silver traded hands. There is ONLY 33 Million ounces on the CRIMEX.

The Banksters can get away with this because the Fed can supply unlimited amount of fake money to pull this off. Banksters must suppress the price of real money because if they don’t, their quadrillion dollar control system would end. The regulators also turn a blind eye to this manipulation, just like they did to Bernie Madoff. Seriously, after the Andrew McGuire testimony, anyone waiting for the CFTC or SEC to come to the rescue of silver investors, is smoking crack.

The next layer that most people don’t even see, is the huge derivative market. In each of these positions there is a bet on the movement of the positions not necessarily on the underlying asset. It is like betting on the score of the second quarter or the over and under of a football game. This is an even further level of manipulation, leverage and debt. The orders of magnitude are so incredible due to the amount of leverage and that it all rests on the flawed idea of the dollar existing forever. This is something you and I would never even consider doing, but I believe it will be the force multiplier that will be the financial weapon of mass destruction when the physical default happens.

One day this will all end when the CRIMEX cannot deliver upon their paper promise. This is the day that I am investing for and makes all of this fake paper manipulation like a gnat on my windshield.  When this happens the entire world will change forever. I look back when I sweated buying silver at $7.90 versus $7.50 and now how ridiculous that was. When the mathematically inevitable collapse of the world-wide fiat assets happens it will not matter if you bought at $35, $50, $75 or $1,000, it will only matter that you did buy and that you do have physical silver.

I went on Ebay over the weekend and real Silver Eagles are going for $45 dollars. That is $10 over spot and like 25%+ over spot. APMEX is selling Silver Eagles for $7 over spot but you have to wait a couple of weeks to get it. The Real physical market did not react the same way the paper market did. When you own real physical silver you don’t just panic and take your hoard and sell it. If you saw through all of the other ways to buy silver and you bought physical, you already are buying for keeps.  You cannot cheat an honest man or a physical silver investor. You cannot be forced out of your position and one day he who has the silver will make the rules.

Any day you can trade fake money for real money, is a good day. People are asking me should they buy today or wait for lower prices. I say dollar cost average in. When the market is down buy more, when it is up buy less, but buy physical! I hope this past week will give you absolute clarity about the difference of the paper and the REAL PHYSICAL silver market.

34 comments to Observations of the Silver Smack Down

  • Scout

    Excellent explanation, Silver Shield! I am sharing it with my friends who are seeking to learn more about silver. I received my new SOLA T-shirt today – KOOL!

  • silverdoc

    With the advent of the Hong Kong Mercantile Exchange (HKMEx) on May 18th, the monopoly the comdex has had on price exploration will now have to be fought for an a leveling playing field. This can only help those of us investing in the physical marketplace, as prices will have to be more in line with true market value, rather than speculative derivitive paper folies.
    When the COT comes out tomorrow, it should show that there wasn’t a huge increase in the amount of allocatable silver in the comex, AS THERE SHOULD HAVE BEEN, based on all the selling last weak. This will point towards the undeniable fact that last weeks action was just a bear raid riding the vapor trails of the 82% margin increase fiasco.

  • Just stumbled across your site – my wife actually found it. Linked back from my little blog.

  • Jon

    Lets end this charade………buy the physical silver……

  • mrT

    I see it as silver is on sale, 25% off! I just bought a bunch more SAE @ $38!

  • Ronny

    if the feds are “looking the other way” while the funding of naked shorting is going on; this could go on indefinitely. how then is there ever an opportunity for silver to ever correct and sell for what it should sell for organically ? how could the general populace ever get ahead with such a powerful machine against us ??

    • Silver Shield

      The only way this ends is the big lie is exposed and they cannot deliver on their paper promises. I am investing for the default of the CRIMEX and the collapse of the other big lie the Dollar.

  • Kevin

    It is apparent to anyone that the manipulation of the silver market is in high gear. I am not so sure about all the apparent reasons that are floated, but many are correct, and some are quite a reach. My whole take on the stock market, and futures, and the ability of the big players to naked short, is that they have a license to counterfeit. They will do so, until they destroy the financial system. Why would anyone give any value to a silver futures contract other than the fact that there’s a float of 8 billion ounces divided by 33 million actual ounces, which should give us a value of about 242 ounces out there being floated, for each ounce actually possessed. Anyone who would pay more than 1/242 of the actual price of silver is either an idiot, or someone going along to get along. So we have silver as of 5/10/2011 @ 156 am EDT going for 37.69, under the math above, it’s actual value is about 15 to 16 cents. Does anyone see that the emperor has no clothes? Surely it can’t be just us “fringe lunatics” and our conspiracy theories? Can it?

    The best part, is that there are actually sophisticated investors who are actually trading in these futures, every day, even though the actual values are as shown above. It’s similar to musical chairs, in that it’s great while the music’s playing, but once it stops, the losses are going to be so catastrophic, that all the Federal Reserve Chairman and all the Federal Open Market Committee chairmen won’t be able to fix humpty dumpty nor our financial system. Once this market meltdown occurs, what would actually be a safe place to be invested? I am wondering what value physical silver would have, if the catastrophic meltdown occurred. I’d be more inclined to purchase some physical silver, but I can also see how a few pallets of coffee, toilet paper, and other conveniences and necessities of life might be equally as good an investment. Chocolate would be great, though I’m not so sure how well nylons might go over.

    • Silver Shield

      Wouldn’t your math be the other way around and that silver should be 242 times more expensive? Or something much greater if they are trading much more Paper than the real stuff. I mean if there was that many dollars cycling through such a small market, shouldn’t it push the price up exponentially?

      The cure for high prices is high prices.

  • PitBull Pappa

    Here’s a link to a cool article on zero hedge that you might find interesting…


    hold strong & keep stack’n…


  • Found you on Max Keiser. Good article.

    I can’t buy silver because there’s 25% VAT on silver in this part of Eurotrashland, but I buy gold when I can.

    • Silver Shield

      Bullion Vault says you can buy silver with them with no VAT.
      Do you have friends or family outside the VAT?
      Silver has been growing at 20% a year so how long would it take to get that back.

  • lastmanstanding

    Everyone…try looking at the big picture world wide. As more dollars are printed they are worth(less). It doesn’t matter what we do here in the US as the dollar affects everyone worldwide whether you want to believe it or not.

    Look at all of the rioting around the world. Here in the US, we have problems with nearly one half of our people not wanting to work…People are just plain happy to collect money from the govt. for sitting on their asses while they continue to rape the rest of us for the money.

    Look at all of the tornadoes, fire, and massive flooding that is occuring thru out our country. Much of the tornadoes and flooding are in our prime farmland.
    Much of this land will NOT BE PLANTED THIS YEAR. Many in this area will rebuilt their lives…the other half are happily waiting for obama to pull the same shit bush did with katrina…x 1000 or more. Beryankme will just print more money.

    What can I say about all of the wars.

    I don’t know what more I can say…the USA is being destroyed by the communist beast…SS and many others have provided documented proof that this is happening.

    Everyone worldwide is going to have to make a choice…Many are already fighting for their lives…many good people of all races, etc. have died, been murdered whatever you want to call it.


    But hey…just facebook, tweet or text a little more and hide in your little world that is soon to be ripped apart.

    Invest what you have left in surviving to get to the “other side”.

    I am fortunate to live in what I feel is one of the safest places in the USA to get thru ANYTHING that will happen…Everyday I prepare a little more…Everyday I try to inform/educate someone else…Everyday I pray for myself, my family, friends and anyone else that wants to live free from big govt. I will try to help those that will help themselves.

    The only way that WE will survive is with Gods mercy and help…

  • doug

    Amen lastmanstanding…as your northern neighbor we also think we live in the safest place,but you have to prepare accordingly,a little more each day after day.But WTSHTF it will be Gods mercy and help that help us survive and His desire for honest weights and measurements of money not the abominable paper note as a promise to pay backed by good intentions to make it good,while the sounds of printing presses sounds like pounding hoofs of horseman of revelation…God bless

  • Watch the price of silver go back down at the end of the month… JP Morgan will have to drive it down so they don’t have to come up with so much money (more than they have) to cover their silver short. place of refuge 2012 dot com

  • AZgirl7

    Is it possible that the COMEX was inches away from default as it was? Is it possible they had to hit the button when the markets were closed here, so there would not be enough bids to contain their desperation?

  • Randy

    Kevin wrote, “I am wondering what value physical silver would have, if the catastrophic meltdown occurred?”

    Having a reasonable store of toilet paper etc. is a good idea, but these items take up a lot of space and are not easily moved in large quantities. On the other hand, silver has been used as a medium of exchange and a store of value for many millennia. Like gold, silver has all the intrinsic qualities that make for good use as real money. I often hear people say, “Who will buy your silver in the event of a collapse?” These people cannot think outside the box of Federal Reserve Notes. When that day comes you will not have to sell it, you will spend it.

    History repeats itself. In the first century A.D., under Caesar Augustus, Rome’s coin (the Denarius) was 100% silver. In 218 A.D. the Denarius was forty three percent silver. By 238 A.D. it was only twenty eight percent silver. When the fall of Rome was inevitable, the Denarius was a mere 0.02% silver.

  • Matt

    WOW! Sounds awful familiar! Silver to Copper in the dime and quarter, Copper to zinc in the penny. Obama has a bill the change the nickel. I Plan to buy as much silver a I can and when I can’t I throw a hundred at nickles just for the hell of it:)

  • Randy

    On May 12, 2011, the melt value for the 1946-2011 nickel is $0.0631855. The nickel is 75% copper and 25% nickel. It should be noted that it is illegal to melt down U.S. coins. It should also be noted that travelers leaving the U.S. are limited to taking $5.00 worth of pennies and nickels out of the country. No more than $100.00 worth of pennies and nickels can be shipped out of the U.S. in any one shipment, and those only for “legitimate coinage and numismatic purposes.
    Penalties for violation include fines up to $10,000 and 5 years in prison, plus forfeiture of the melted, shipped, or treated material. Nonetheless, you can put them in rolls and eventually they will sell on the bullion market just like 1964 and earlier 90% silver coins do today.

    The melt value for the 1909-1982 copper cent is 0.0259798, on May 12, 2011. Save your nickels and 1982 and later pennies.

    You know a nations currency is going to hell when they have to make laws like the aforementioned.

  • How about this: We, the (Plebs) of the Planet, enforce a TOTAL REPUDIATION of gold – by NOT BUYING gold – by ONLY BUYING AND/OR BARTERING using SILVER… Eventually, the following would occur: 1) JP Morgue, and affiliated banksters stock would go to ZERO, 2) U.S. Dollar would totally collapse, 3) self-proclaimed ‘elites’ would attempt to buy bread with gold – only to be told ‘we only accept SILVER’…this is totally within the realm of possibility – if, as Max Keiser has stated – we can ‘get this global party started!’ (A total ‘SMACK~DOWN’ of the self-proclaimed ‘elites’)

    1) Crash JP Morgan – Buy Silver (Episode 96, The Keiser Report)

    2) The Silver Bullet and the Silver Shield

    3) And, on the recent silver ‘smack-down’
    Observations of the Silver Smack Down

  • The Global Debt Crisis: How We Got in It and How to Get Out
    by: Ellen Brown, Truthout
    Monday 6 June 2011


  • From Jim Butler (www.butlerresearch.com) and Miles Franklin (free) e-newsletter:(this is the most ‘bullish’thing I’ve read,on where silver prices will likely go,in the future:)

    “So here’s my takeaway –total world silver inventories appear no greater than the one billion ounce level I had long guesstimated and may,in fact,be significantly less. That’s one billion ounces (or less) in a world with almost 7 billion souls. I’ll do the math for you –there is less than 0.15% of one ounce per capita. In dollars,that comes to about $5 worth of silver per capita. Just for comparison purposes,the per capita dollar value of gold bullion (3 billion ounces) comes to $650 per head,or 130 times more than silver. If that doesn’t auger well for silver outperforming gold in the future,I don’t [know] what does.

    Pay attention to the daily changes in recorded silver inventories,but not to the point of losing track of the big picture. The big picture shows there is an incredibly small amount of silver in the world,much less than just about anyone realizes.

  • […] Don’t Tread On Me Finance, Politics   crash jp morgan buy silver, how to invest in silver, physical […]

  • […] a Comment Dont-tread-on.me By Silver Shield May 9th, […]

  • […] Observations of the Silver Smack Down. […]

  • […] despite over 8 times the global production of silver being paper traded last week. (Read… Observations of a Silver Smack Down and I Smell BS in the Silver Market.) And demand must be up, because despite the massive sell off, […]

  • […] they manipulated the silver price this time by increasing margin requirements, please read “Observations of the Silver Smack Down”. The article is a great read and it has a quote I will likely never forget “Any day you can […]

  • […] amount of paper traded for every physical ounce of real silver and gold. Just look at all of the manipulation in the May silver drive by shooting I reported on.  The Elite use a myriad of paper schemes to […]

  • […] amount of paper traded for every physical ounce of real silver and gold. Just look at all of the manipulation in the May silver drive by shooting I reported on.  The Elite use a myriad of paper schemes to […]

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