Many of you are waking up to Sub $20 Silver with another huge paper smash in the early hours of the day. This follows the Fed Speak and is typical hit and run for these banksters, especially during the seasonal summer doldrums of silver. They want no alternative to the almighty dollar and will use every trick in the book to keep the dollar prominent.
Here are 11 things you need to keep in mind about silver right now.
1. This is ALL paper manipulation. There is NO massive physical dump of metal on the markets. In fact it is quite the opposite, as I will show below. This is purely an HFT trading pushing a waterfall in paper positions. Does a -$52 dump in the trillion dollar gold market make any sense when almost half of the gold in the COMEX disappeared in the past few weeks? It does if those that are taking delivery, knowing that massive change is coming, want you to dump your metal cheap. Short the paper, take the physical.
We live in a world where electrons control so many people’s perceived reality, whether it is the boob tube or the flashing ticker of the markets. Those in power know, like the Wizard of Oz, that if they pull a few levers they can strike great and powerful fear into the masses. This is necessary to fool those individuals into sacrificing themselves to that power. The weak hands sell to the strong hands. The story is never who is selling, it is always who is buying.
2. US Mint Silver Eagles sales are still at a record pace to reach 50 million ounces this year! So far this year they have sold 24.2 Million ounces of silver, and with this latest smash, I am sure the pace will go even higher. To put this into perspective, last year the mint only sold 33 million in all of 2012. And the biggest year of sales was only 40 million ounces for 2011.
3. But the Eagles are not necessarily being sold to Americans… As I prepare for the relaunch of the Silver Bullet Silver Shield series with my new Warbird and Love designs, I have had the pleasure of speaking to many of the real market players out there and I can tell you that a huge part of the demand for this record pace in Silver Eagles is coming from overseas.
Sales are good here, but nowhere near the feverish pace that 2011 generated. There is a huge surge in foreign buyers of silver and that is accounting for much of the demand. The historic silver bull market of the 70′s in silver was only created by America and Western Europe. This time around the world is joining in, and in a big way. There are trillions of dollars floating around and these nations know that it is not a fair economic system to be tied to the petro dollar. That is why nations like China, Russia, Japan, Australia and many more are dumping the dollar in bilateral trade. The world is going to see that the only currencies that have no counter-party risk are precious metals and they will be taking delivery.
4. 16% of domestic silver production was destroyed with the Kennecott Mine collapse in April. The US produces about 40 million ounces a year total in domestic mine production. 5 million of that came from the Kennecott Mine in Utah and that is now buried under 165 million tons of rock. So since the US Mint must only use domestic mine production for the Eagle program, we will use every ounce we produce just for these coins. Forget about the thousands of uses for industrial silver, and now there is a huge gash in the American Silver productive capacity.
5. These lower paper prices are not going to bring on more production… The true cost of mining silver is much higher when you use real cash costs. Miners are not going to produce, only to sell at a loss. They will simply not produce, hold for higher prices or go out of business. Which once again might be part of the plan. If you are logical, this may be part of the plan, to buy these assets on the cheap before the collapse of the dollar.
6. We have been here before… I sat through the grueling 2008 silver collapse. I listened to all the silver naysayers bash silver then. They are once again fluffing their feathers. They said that silver was done and that you should sell. I always ask them what to do with the money then? You cannot be safe even in cash with our highly leveraged banks. You cannot be safe in the stock market with it at record levels and flash crashes. Even Real Estate at these ridiculously low interest rates is at risk if either the economy turns down or interest rates spike.
We will never know the day the music stops and those that trade in and out of markets risk being caught on the wrong side of history.
I stack because I have read the end of this drama and those with real friends, real assets and real skills will thrive. The silver bashers never offer any logical arguments on where to better put our money, which leads me to believe that the majority of them are just paid shills. And the ones that actually predicted the criminal manipulation of these markets to the current levels are probably even more guilty of being closer to the heart of the debt and death paradigm. I believe that many of these guys are simply trying to gain credibility with their insider knowledge, but are more likely the Pied Pipers leading the follower rats astray at the most critical moment. Listen to all, follow none!
The biggest money historically, has not been chasing trends, but seeing where the world is going to go and buy right and sit tight. It is not sexy, but it works. In 2008, I was determined not to be emotionally pushed around and used the logic I presented in the Silver Bullet and the Silver Shield video series to hold firm and buy more. Thank God I did, because I then watched silver rise almost 500% from 2008 to 2011.
7. Silver is way below its nominal record price of $50 in 1980. It is even further below the government inflation adjusted level of $135. And if you use REAL inflation adjusted numbers, like Shadowstats, the REAL 1980 inflation adjusted price of silver would have to be $450! Silver is a precious and depleting resource and when you look at the price of housing, cars, education, food, energy, taxes, insurance back in the 1980′s, it is insane to think that silver is so cheap on any level. Especially when the uses of silver have skyrocketed since the 1980’s. It is now used in technology on a massive scale and is even now said to cure cancer. Heck, they did not even have Silver Eagle sales back then, or the Silver Bullet Silver Shield for that matter.
8. This time it is going to be much larger! None of the problems from the 2008 Banking Crisis have been solved. In fact it is orders of magnitudes worse. What started out as an institutional problem, is now a sovereign nation problem. This collapse will not be a puny multi – billion dollar corporation like AIG disintegrating, it will be the Trillion dollar economies of the nations of the world and the Quadrillion dollar derivative monster markets cracking apart. There is no financial, political or social safety net left. We destroyed all of that in 2008 and are on a debt based junkie delusion.
The collapse of currencies will affect every counter-party, debt based asset in the world. Your cash, stocks, bonds, Real Estate, pensions, insurance, all of it. The collapse of financial contracts will lead to the collapse of all political and social contracts. The Anger Phase of humanity is coming and only real assets with no counter party risk will be worth anything. Most commodities have storage or degradation issues leaving only precious metals as a real store of wealth.
9. 1:65 Ratio makes silver the only choice. The current gold to silver ratio is: 1 ounce of gold is worth 65 ounces of silver. These come out of the ground at a 1:9 ratio! That means just to get back to the natural mining ratio, silver would have to out perform gold 600%. This is regardless what happens to the dollar value of gold. If gold goes to $13,000 an ounce, silver at a 1:9 ratio would be $1,444 silver.
10. The historical stockpiles of silver are destroyed. We know implicitly that gold has been treasured and kept secure. While silver has been used and abused as a cheap, industrial metal like tin. Since the price of silver has been under attack since the Crime of 1873, silver has been used in such small quantities that it has been destroyed. The US government in 1950 had 5 billion ounces of silver in its strategic stockpile, now it has ZERO. So if gold and silver come out of the ground at a 1:9 ratio and gold has been treasured and silver stockpiles destroyed, logic would dictate that the end of this silver bull market will find the gold to silver ratio BELOW 1:9 and I think it will come close to a 1:1. Either way, we are a long way away from those levels which makes silver so exciting right now.
It is the destruction of huge stockpiles like this that explains the decade long supply deficit to the growing demand of silver. Do not forget that we are only 7 years away from the United States Geological Survey’s prediction that if we continue to consume silver at these rates, silver would be the first metal to become extinct. When I challenged the USGS on that statement, they said that only a massive revaluation of silver to bring on more production and wiser use of silver would stop the extinction. I don’t think we will ever run out of silver, but I do believe that the free market will crush this paper manipulation and that anyone holding physical silver on that day will then have a lottery ticket in real value.
11. Forget the dollar price of silver. I think measuring silver in dollar terms is the wrong way to value silver, especially if we are talking about the end of the dollar. The thing I love about stacking silver is that regardless of the price, I know the amazing value and uses of this unique metal. Besides the gold to silver ratio, I think one of the most compelling reasons to buy silver is the historical value of silver to human labor. Throughout history 1 day of hard human labor has been measured in 1/10th of an ounce of silver. This is seen in the Bible with vineyard workers and Roman Soldiers being paid a Denarius. It is seen in Sun Tzu’s Art of War. It is seen in the Industrial Age worker’s pay. It is even seen in 2/3 of the world today that lives off of $2 a day.
When the generational debt based Ponzi scheme collapses many would be lucky to get a silver dime a day for their labor, because so few of us actually do anything that produces real value. The debt based consumer economy has warped our reality so much that hardly anyone produces any material value other than shuffling papers and wasting time. For the cost of your cup of coffee you are sipping on now you can buy a silver dime and have one day’s buffer of real money from a very harsh reality.
You can think of it as fat tail insurance, I see it as the investment of a life time.