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Don’t Squeeze The Silver

Michael Victory's picture





 

When there isn’t enough of X and excess demand exists for X, the price of X rises. The casino aggravates the cycle, and things can get wild when those betting against X’s rise decide to get out of their bets. To suggest that JPM and others aren’t sitting at the table with bets against silver is a bit wigida wack. Nothing new really, the game has been going for a hundred years.

 

The ESF

According to GATA (2000), associate Reg Howe published “The ESF and Gold: Past as Prologue?”, which revealed some good information about the Exchange Stabilization Fund (ESF), a quasigovernmental agency that reports to only the president and Treasury Secretary. Created behind to the 1933 gold confiscation, and subsidized by the paper profits arising form the 1934 devaluation of the dollar against gold, the ESF is cloaked in mystery and has the exclusive domain of the executive branch and operates largely outside of congressional oversight.

In GATA (2000), Howe notes that unexplained losses were appearing in the ESF’s quarterly reports to Congress in quarters when gold prices went up, while profits were earned in quarters when the gold price fell. The result was probing because, the Treasury both in the public statements and letters in response to queries, maintained that no interventions in the foreign exchange markets were taking place. Howe explains, “There were no other obvious activities that might explain these losses.” Conclusion: The ESF was intervening in the gold and silver market.

 

Game On

In 2000 irrefutable evidence of the U.S. government’s intervention in the precious metals market was available from its own public reports. The reports reveal reoccurring discrepancies month after month. Although denied this was indeed proof the U.S. government’s intervention in precious metals prices. 

In February of 2001, the Federal reserve began covering it’s tracks, not only dropping all reference to the ESF in future U.S. Reserve Assets reports, but going back and changing already published reports (Turk & Rubino, 2004).  Not only were the figures changed, but all previous references to the ESF were eliminated.

 

Why?

Why would a central bank bother to try and manipulate silver’s exchange rate in the first place?

Here’s Why:

Because among other things… silver is money

 

Silver and big brother gold, together are yardsticks by which the world’s currencies, and the central banks that manage them are measured. When a precious metal’s exchange rate is low relative to a currency, the central bank appears to be doing a good job of keeping inflation down and the value of their fiat currency up. If a bank can keep precious metals undervalued they can make their currency look fancy nancy.

 

Small

The precious metals market is mega, mega tiny and accounts for less than one percent of total worldwide assets. As the silver price continues to rise, those on what is increasingly looking like the wrong side of the bet to be on, will cut their losses. Silver is set up to surf to even higher levels. There could be a time soon when silver is not available for purchase. Hold on for the ride.

 

~MV

 

GATA. (2000). Gold Anti-Trust Action Committee. Retrieved from http://www.gata.org/node/1179

Turk, J., & Rubino, J. (2004). The coming collapse of the dollar. New York, NY: Random House.

 

 


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Sun, 02/20/2011 - 10:33 | Link to Comment Zero Govt
Zero Govt's picture

yes I think Prechter took over Elliotts 'piece of work' thinking he could improve on it, though he claimed recently he's only made one finding since. The problem is it does not work, the failure rate of their predictions is so close to 100% it's beyond stupid.

And that's despite the EW crew roping in every other known technical technique to try to keep this sack of shit afloat. They use sentiment indicators, oscilators, Keltner Channels, Fibonachi time and chart patterns and yet STILL their EW waves cannot predict right!

To be fair Prechters deflationary writings and his socionomics are brilliant and i'd recommend that. But his subscription service for market predictions is diabolical and it's about time he stopped grossly misrepresenting its ability to EW Clubbers. 2 outta 3 ain't bad i suppose but he's incompetent at what subscribers pay him to do, predict accurately 

Sat, 02/19/2011 - 13:21 | Link to Comment Jack Sheet
Jack Sheet's picture

Couldn't agree more. If Elliott wave theory were any good, then R.N. Elliott should have died a multibillionaire instead of a pauper and Prechter should have accumulated absolutely unimaginable wealth rather than having to tout his system like wooden assholes for rocking horses.

Sat, 02/19/2011 - 10:49 | Link to Comment celticgold
celticgold's picture

 u got that right SoZ

Sat, 02/19/2011 - 10:19 | Link to Comment Stuck on Zero
Stuck on Zero's picture

There's another simpler explanation for the government's involvement in the silver market:  Insiders get rich when the government manipulates a market.  That's why the government gets bigger, more involved in ALL markets, more intrusive, and more corrupt. 

Sat, 02/19/2011 - 10:01 | Link to Comment WTF2
WTF2's picture

Where does it say government in silver market??  Gold is what is government manipulate.  Silver is performing so much better.  The Hunt's had their way to $50 in 1980.   With the current money supply, the least concerted effort by the hedgies could get us over that number real fast.  The problems in the middle east and the economy in 1980 pale compared to the world's current mess.

If the rumors that the pool of gold is polluted with bogus tungston gold plated bricks catches on, then SILVER will rocket that much further.

Sat, 02/19/2011 - 05:47 | Link to Comment Moe Howard
Moe Howard's picture

I can only say...

  Buy the dips....

      Until it hurts...

           Then buy again...

Sat, 02/19/2011 - 03:16 | Link to Comment hidingfromhelis
hidingfromhelis's picture

Don't squeeze the Silver, but please squeeze the Morgue.

Love the Silver Surfer graphic!

Sat, 02/19/2011 - 03:11 | Link to Comment Freddie
Freddie's picture

Where is Turd Ferguson?

Sat, 02/19/2011 - 16:18 | Link to Comment RockyRacoon
RockyRacoon's picture

He's pinching off a new blog post!

Sat, 02/19/2011 - 01:50 | Link to Comment plata pura
plata pura's picture

32x face.

Sat, 02/19/2011 - 00:40 | Link to Comment DavidPierre
DavidPierre's picture

At the last Silver Summit in Spokane in October the price of silver was $23 and change.

The GATA camp was pounding the table back then about how explosive silver was. GATA’s critics like Kitco’s Nitwit Nadler (who is here at this conference) and the CPM’s Group Jeff Christian were BEARISH at the time and expressed their opinions/analysis to the attendees.

Now, how WRONG can someone be? Yet these clowns refuse to admit how off target their outlook was.

And there is a reason for that. They have been working with the wrong supply/demand numbers because they have refused to deal with the physical market offtake used over the years in gold and silver to suppress their prices.

The silver suppression has taken on a different dimension to a degree. Silver has been artificially depressed to a much greater extent due to the use of derivatives by JP Morgan and their allies. While a certain amount of gold can be mobilized to assist an orchestrated attack on that precious metal, The Gold Cartel has been gradually running out of physical silver and is hitting the wall due to lack of supply.

Call it a "Tipping Point" that has now come to pass … as evidenced by growing signs of backwardation, the key to proof of tightness in the physical market.

The key point here is the GATA camp, and supporters like Eric Sprott, has been pounding the table about what was coming down the pike regarding future silver prices, while, for the most part, the mainstream analysts (who refuse to deal with what GATA knows) have missed this move, having been silent, or even bearish, for what seems like forever.

Well, here we are … silver is exploding.

One reason to get into this is that these same clueless GATA critics have no idea where silver is going from here and are useless to listen to … even as the gold/silver reporters constantly go to them for the latest analysis.

They ought to be going to Eric Sprott who dazzled the crowd in New Orleans when he spoke of $50 silver in that not too distant future (a number of months, possible as quickly as 5 or 6) and in Vancouver when Eric spoke of $65 silver later this year.

One more point to address regarding the silver market … and that is we have a PANIC coming as the JPM crowd and their sycophants struggle with their huge short positions.

The last two days' price actions  suggests some sort of panic.

At the same time, it would appear the bums and friends have not changed their tactics. This suggests JPM and others are doing some "Texas Hedging" of sorts, adding to an already vulnerable short position.

If so, the REAL panic is still ahead. Of course, and unless, the US Government allows them to declare "Force Majeure." But, that would lead to enormous complications because of the class action lawsuits against JP Morgan and the two years+ CFTC investigation into the silver market.

via leMet

Sat, 02/19/2011 - 11:38 | Link to Comment Bastiat
Bastiat's picture

GATA’s critics like Kitco’s Nitwit Nadler (who is here at this conference) and the CPM’s Group Jeff Christian were BEARISH at the time and expressed their opinions/analysis to the attendees. Now, how WRONG can someone be?

100% wrong. That's Nadler: often wrong, never in doubt. It does real damage to Kitco's credibility to have pompous PM bear on the payroll.


Sat, 02/19/2011 - 03:47 | Link to Comment gwar5
gwar5's picture

 

JPM can go for the force majeure, but I agree, that would be a hysterical farce since there is a proven history of them criminally causing it themselves. It'd be like a bank robber who gets caught red-handed saying he's innocent because it was an act of God that he couldn't run fast enough. 

Bankers doing God's work is not an act of God!

 

Fri, 02/18/2011 - 23:37 | Link to Comment Jreb
Jreb's picture

Everyone forgets - nobody works for free. When the shit hits the fan the cops and everyone else will be at home with their families holding on for dear life like the rest of us.

Sat, 02/19/2011 - 02:05 | Link to Comment StychoKiller
StychoKiller's picture

What's the Govt gonna do when their hired hands (FBI, IRS, Police, etc) wise up and start demanding to be paid in specie?

Sat, 02/19/2011 - 08:49 | Link to Comment Zero Govt
Zero Govt's picture

everyone that has enjoyed the cushy ride of public service fully deserves what's coming... they've had the upside for decades, i have no sympathy for the coming downside, it's been too long coming

Fri, 02/18/2011 - 23:25 | Link to Comment Gordon Freeman
Gordon Freeman's picture

Guys, none of the apocalyptic stuff is ever going to come to pass.  Confiscation?  You must be kidding--these idiots can't find their asses with both hands.  

The problem is that most of you still have some sort of law 'n order mentality.  You obviously have never dealt in any, uh, contraband.  There has always been, and always will be, an economy within an economy--get you heads in the game...

Sat, 02/19/2011 - 09:11 | Link to Comment johnQpublic
johnQpublic's picture

confiscation happened befor so -1

"The problem is that most of you still have some sort of law 'n order mentality.  You obviously have never dealt in any, uh, contraband.  There has always been, and always will be, an economy within an economy--get you heads in the game..." +1

sum zero

so how much silver or gold are you charging for a bag of weed these days?

i'm thinking that if you are only accepting metals for your weed, your business is gonna drop off significantly

the black market usually operates in coin of the realm......FRN's for now....dollars play in other economies because they were more stable than coin of the particular realm....were

but what about here?

accept remnimbi?

if so, what are you gonna do with it?

canadian dollars would be more accessible and easy to trade, canadas at least a neighbor, so you might be able to use them(BC weed could be purchased or silver etc)

just playin devils advocate here, but due to limited amounts of both foreign currency here, and precious metals dictates coin of the realm all the way to the bottom

 

Fri, 02/18/2011 - 23:13 | Link to Comment rlouis
rlouis's picture

Don't forget copper, today's pre-1983 penny value:

1909-1982 Cent (95% copper) *
$0.01

$0.0295266
295.26%

http://www.coinflation.com/

No matter what, the couterfeiters are going to lose, even more interesting:

http://gata.org/node/9623

Sat, 02/19/2011 - 05:42 | Link to Comment Urban Roman
Urban Roman's picture

Sticking to a magnet was a bad sign too.

Sat, 02/19/2011 - 02:04 | Link to Comment StychoKiller
StychoKiller's picture

What kinda Idjut would "think" that Morgan Silver dollars from the 19th century would have no signs of circulation on them?  Caveat Emptor!

Sat, 02/19/2011 - 16:17 | Link to Comment RockyRacoon
RockyRacoon's picture

You are not serious, right?   There are literally 100s of thousands of Morgan Dollars in uncirculated condition.   And several millions more in AU condition which would pass to the newbie grader.   eBay alone now lists over 10,000 Morgans in slabs graded MS.  For every slabbed coin there are 10,00 unslabbed mint state coins.  There is a coin show in your area if you are in the U. S..  Go to one and take a look.

http://www.coinshows.com/

Sat, 02/19/2011 - 11:01 | Link to Comment batting500
batting500's picture

I believe that many, many Morgans went uncirculated as the ease of carrying silver certifivates proved alluring.  Massive amounts (approximately 3 million) of them sat in bags in mint vaults but were sold off in the late 1960's.  In order to have numismatic value many issues of Morgans need to be in Near Mint or Mint condition.  Most issued ones and worn ones are simply considered Junk Silver.  So importing a ship full of them in 'Mint' condition is not unbelieveable.

 

Good Luck...

Fri, 02/18/2011 - 23:12 | Link to Comment Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

Look at Egypt. Did Hosni have a chance to confiscate gold in the name of "national security"?

Fri, 02/18/2011 - 22:28 | Link to Comment Silverite
Silverite's picture

In my country, the Constitution says: "No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts."  Dictators took over with illegal dictates but no legal amendments in 1873, 1933, 1965, and 1971.  All of those illegal dictates are Void Ab Initio and shall just be ignored, no need to repeal them or change a single law. The word *and* is very clear, thus any attempt at Monometallism is illegal unless the Constitution is amended.  Anyone who is sensible or patriotic or angry or just wanting to increase purchasing power through toppling the corporatists dictators should exchange all their illegal paper money for silver and gold.  Trade some back as needed to pay bills to shills.  Coinage Act of 1792--penalties for debasement are still legally in effect, as it was never legally repealed!

Sat, 02/19/2011 - 08:53 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

perhaps this is a way out of our National Nightmare: Arizona law that many other states might copy:  State Nullification of Federal law and executive orders if not constitutional: this link is to Az gov site.. read the law.

 

http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/50leg/1r/bills/sb1433p.htm

Fri, 02/18/2011 - 22:40 | Link to Comment D1eeeeeNAHHHHH
D1eeeeeNAHHHHH's picture

I don't know if you've been to civil court or district court lately, but the law normally isn't followed to the letter, word, sentence, paragraph, amendment, article and the consitution.

It's whatever the judge feels like doing is what the law is.  Appealing normally is a waste of time as judges are like loved brothers.  If your loved brother made the wrong decision, would you embarrass him and hurt his career over something as small as what's right or wrong that can pass by largely unnoticed by everyone?  I think not. 

Sat, 02/19/2011 - 14:31 | Link to Comment CIABS
CIABS's picture

D1eeeeeNAHHHHH, i think you're on to something, but i think it might go deeper. there's a school of thought that sees the law as having been controlled for centuries by the equivalent of a secret society. most participants in the system are not in on it, and many are not even aware of it. the law might often mean what it says, but in a way that differs from what the public believes. if, for example, the u.s. constitution does not apply to individuals, then the public is not going to understand how it is that the law means what it says. i can't say authoritatively whether the constitution applies to individuals, but i am told that in many instances, judges threaten lawyers with contempt of court if they resort to constitutional arguments on behalf of their individual clients. other questions have to do with the legal status, or legal definition, of the united states of america itself, the states, and so on; and with which legal traditions are in force, whether they be maritime, admiralty, common, statutory, and so on. the overriding assertion of this school of thought is that the law is perhaps very systematic, but the system is not taught or explained to, and not understood by, people who have not been ushered into the legal secret society that runs things.

Fri, 02/18/2011 - 23:01 | Link to Comment Dr. Sandi
Dr. Sandi's picture

My loved brother has already done some jail time. Maybe a little more 'brotherly' jail time wouldn't be such a bad thing.

Fri, 02/18/2011 - 22:18 | Link to Comment tpbeta
tpbeta's picture

You can make a tin foil hat out of it to keep out the mind rays of the Bernank. That's what I use mine for.

Fri, 02/18/2011 - 21:58 | Link to Comment SuperRay
SuperRay's picture

Seems like many are missing the obvious - TPTB will not let any crisis go unused, and they'll use any of the many crises that are about to befall us to confiscate all the precious metals their little hearts desire.  You can buy a bunch of silver and gold (i have), take possession of it (i will soon), get yourself all the firearms you want, and you'll still be stepped on like an ant, unless the whole country goes "wisconsin" at the same time.  Hey, This will be a real kick.  As a VV I'm thinkin' this might be the most fun i've had in 40 years.

Fri, 02/18/2011 - 23:13 | Link to Comment I think I need ...
I think I need to buy a gun's picture

No I don't think they will confisicate. They have it all (the bankers and elite) monetizing will just make them own the planet. They won't care a few sheeple own the stuff. The only explanation to keep the dollar like its been was to get cheap oil. That appears to be ending in the middle east now it looks like we are making no attempt to control things anymore. I think we'll be on our own for oil. Oil will be priced in gold

Sat, 02/19/2011 - 08:51 | Link to Comment johnQpublic
johnQpublic's picture

may be priced in gold, but will be paid for in fiat due to supply constraints if nothing else

Fri, 02/18/2011 - 22:58 | Link to Comment dalkrin
dalkrin's picture

Time to do justice to our American forefathers and man up to resist the oppressors.  I was moved to order a Kevlar vest and another 100 shells.  The breakout in silver is giving me a reminder that this stability we live in could be swept away as nothing but a pleasant illusion.  I won't resort to violence at first provocation, since it is easy to hide what little metal I possess, but rest assured we won't be led quietly to slavery.

Fri, 02/18/2011 - 22:55 | Link to Comment Founders Keeper
Founders Keeper's picture

[...get yourself all the firearms you want, and you'll still be stepped on like an ant, unless the whole country goes "wisconsin" at the same time.]---SuperRay

Thanks for your post, SuperRay.

I'm not too concerned about PM confiscation schemes. As the economy and global financial system burn to the ground, I expect US police and US Service men and women will be too busy containing the looting, food riots, and violent crimes to allocate resources to "collecting" PMs from citizens.

Besides, how many US citizens actually own physical bullion. I would guess less than 1% of the population. (That percentage may grow, but not by much. By the time the general population is convinced that owning PMs is a good idea, PMs won't be available.)

 

 

Fri, 02/18/2011 - 22:03 | Link to Comment silvertrain
silvertrain's picture

 Silver is contained in too many products to confiscate..Are they going to confiscate all the ipads, and Iphones,xboxes, computers etc.. ?  They may pull some other kind of stunt or scam but confiscation will not happen..

Sat, 02/19/2011 - 08:46 | Link to Comment johnQpublic
johnQpublic's picture

gold AND silver were confiscated by roosevelt, so pray tell me why what has happened once can not happen again?

 

history rhymes,repeats,long cycles etc

Sat, 02/19/2011 - 11:31 | Link to Comment Bastiat
Bastiat's picture

I wasn't aware that Roosevelt confiscated silver.

Sat, 02/19/2011 - 12:20 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

In '34 the Treasury did it, but not to the little guy. Over 50k oz was hoarding, and one could hold no more than 2 futures contracts. Not quite the same as the 6102 confiscation of over 5 oz Au.

Fri, 02/18/2011 - 22:29 | Link to Comment D1eeeeeNAHHHHH
D1eeeeeNAHHHHH's picture

They won't take the silver in products.  They will only take physical.  By that time though, I see land amongst other things of real value taken in the name of national security or for some other false excuse. 

Fri, 02/18/2011 - 21:50 | Link to Comment BigJim
BigJim's picture

Shame about this howler in the "among other things… silver is moneylink:

                Silver conducts heat! Those silver ceramic lines fired into your car’s rear window keep the window clear of frost and ice.

Those lines aren't conducting heat - they're conducting electricity, and not very well, hence they generate heat.

Anyone new to silver investing might read that and assume the other assertions were equally 'authoritative'.

 

Sat, 02/19/2011 - 14:21 | Link to Comment RockyRacoon
RockyRacoon's picture

Big Jim, you really should reserve your comments for topics upon which you have a knowledgeable background or relative facts.   The comment was really an embarrassment to the ZH community.  Not that you were wrong necessarily, but that you spouted off on something that was out of your league.

Suggestion:  Stick with politics.  It's no science, so one can never be proven wrong.

Sat, 02/19/2011 - 02:17 | Link to Comment Attitude_Check
Attitude_Check's picture

As a physicist and practicing engineer, Silver is HIGHLY conductive for both heat AND electricity.  In fact its one of the best.  Before you junk something and speak with authority check your facts.  Get a copy of a CRC handbook, and check out Silvers conductance values.

Sat, 02/19/2011 - 13:34 | Link to Comment Shpreken ZeFUBAR
Shpreken ZeFUBAR's picture

+ electron spin

Fri, 02/18/2011 - 22:38 | Link to Comment spinone
spinone's picture

the ceramic heats, not the silver, douchebag.  the ceramic has to be added for the resistance .

Sat, 02/19/2011 - 01:30 | Link to Comment jeff montanye
jeff montanye's picture

keep them honest.  a little knowledge can be a dangerous thing (i know, i got just a little).

Fri, 02/18/2011 - 20:10 | Link to Comment Urban Roman
Urban Roman's picture

When it is no longer available for purchase, and is no longer actively traded, then what determines its price? The manipulators have done much with a low-volume stock market.

They could swap one ounce of silver at a set price of say, $10, and that would be the price of silver, right?

Sat, 02/19/2011 - 11:07 | Link to Comment Monetary Lapse ...
Monetary Lapse of Reason's picture

I have believed for some time that the real Silver funds, like CEF and especially PSLV, will act as the price discovery arena.  Things will be confused as to what part is NAV and what part is premium.... but the price will be the price.    

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