Guest Post: Silver - Still The Investment Of A Lifetime

Tyler Durden's picture

By Giordano Bruno Of Neithercorp Press

Silver: Still The Investment Of A Lifetime

Silver is the common man’s currency. It always has been, and it
always will be. While gold holds its place in history as the great
stabilizer of economies and the shield against hyperinflation, its shine
and its safety should not distract us from its brother, silver, whose
uses are numerous and whose value is often more attainable for those
seeking a solid investment outside of precarious paper securities.

Gold’s unprecedented upsurge in price the past year alone is now
becoming the stuff of legend, and it is also something we at Neithercorp
have been predicting for a while now:

http://neithercorp.us/npress/?p=184

http://neithercorp.us/npress/?p=579

The mainstream media attacks on precious metals were so extreme last
year that they began to border on the bizarre. The “cult of fiat” was
relentless in their attempts to slander gold investors and it seemed as
though no matter how well the yellow stuff did, or how dismal the
dollar’s performance was, they would never get tired of the
disinformation game. Fast forward a year later, however, and they have
been utterly silenced. What a difference twelve short months can make…

As I write this, gold is holding after a spectacular drive at around
$1390, which is in line with my prediction of $1350 to $1450 by winter
2010, and on track to meet my prediction of $1500 by the beginning of
next year. We’ll have to wait and see, but what seemed absolutely out
of reach during this summer is now looking rather simple to achieve
today. Of course, silver has been a bit harder to put a finger on, and
there are many unfortunate reasons for this.

The silver market was wholly dominated for at least two decades by
only a few corporate banks, but primarily through the infamous JP Morgan
and the HSBC. Using coordinated naked short selling and massive
amounts of capital, they have been able to knock silver down every time
its value fell below a certain ratio to gold; usually 60:1. Only
recently has that ratio moved slightly closer to the true wealth of
silver. The historical average ranges between 16-33 ounces of silver
for every ounce of gold.

These banks have also been issuing paper silver securities, usually
in the form of ETF’s, which have no REAL silver backing them. These
securities give investors the illusion that there is too much silver on
the market, and not enough buyers. This causes devaluation in the
metal.

Gold has suffered from the same manipulation in the past, but the
silver market is even more tightly controlled, at least, until this
year…

In November of 2009, a metals trader in London by the name of Andrew
Maguire contacted the CFTC with inside information that JP Morgan Chase
Bank was deliberately interfering with the silver market on an enormous
scale. He not only told the CFTC how the bankers were doing it, he
PREDICTED when they would do it again! Maguire gave two days advanced
warning that JP Morgan would attack silver on Feb 5, 2010. The market
played out exactly as he said it would:

http://www.gata.org/node/8466

The bankers were now caught red handed. The market could only go up from there….

Indeed, silver is now holding at around $27 an ounce, up from less
than $10 an ounce two years ago, closing in on a 300% gain. If you
bought silver in 2008 as I did, then you’ve made out incredibly well in a
very minimal time span. But what about people who were afraid to dive
into the market back then, or who just weren’t aware of silver as an
investment at all? Have they missed out? Is the $30 mark as good as it
gets? I believe that silver still has a long way to go before it
peaks, and room yet for millions of new buyers who are in need of a safe
haven against the imploding dollar but don’t have the finances to
purchase gold. Here’s why…

Bank Fraud Exposure Hitting Mainstream

The Andrew Maguire incident was just the beginning and the event
acted as a springboard. Both JP Morgan and HSBC are now under
investigation for silver manipulation pending a lawsuit filed in New
York. The suit accuses the banks of using their 85% commercial net
short position in the silver market to control its value on the COMEX:

http://www.benzinga.com/news/10/11/579017/jp-morgan-chase-hsbc-face-charges-in-manipulating-the-market

CFTC Commissioner Bart Chilton has announced his belief that there
is, in fact, manipulation of the silver market. In his statement he
said:

“I believe that there have been repeated attempts to influence prices
in the silver markets. There have been fraudulent efforts to persuade
and deviously control that price. Based on what I have been told by
members of the public, and reviewed in publicly available documents, I
believe violations to the Commodity Exchange Act (CEA) have taken place
in silver markets and that any such violation of the law in this regard
should be prosecuted.”

http://www.cftc.gov/PressRoom/SpeechesTestimony/chiltonstatement102610.html

This is an extremely rare admission by the CFTC, which has for many
years ignored all complaints and evidence pointing to bank interference
in precious metals.

The Department of Justice has also launched a parallel probe into
criminal wrongdoing on the part of JP Morgan (though I doubt much good
will come out of the DOJ):

http://www.nypost.com/p/news/business/feds_probing_jpmorgan_trades_in_gZzMvWBqOJpB55M7Rh9vwM

The bottom line is that the corruption in silver trade has been
brought into the light of day, which means banks will have to, at the
very least, back away from their activities to a point, which will allow
PM’s to grow according to free market fundamentals, instead of global
banking whims. This explains why silver has jumped to $27 an ounce so
quickly, but it also signals the possibility of even greater gains in
the near future, especially in light of QE2 and the weakening dollar.

Silver Supply Declining

Just as with gold, silver availability, from mining to inventories,
is in decline. This would not be so much of a catalyst if demand
remained at levels similar to a decade ago. That is not the case.
Demand is skyrocketing.

In June, the U.S. Mint announced it had run out of silver bullion blanks for the production of coins like the American Eagle:

http://www.zerohedge.com/article/us-mint-runs-out-silver

While COMEX silver inventories continue to decline because of constant customer withdrawals of physical bullion:

http://news.coinupdate.com/comex-silver-inventories-continue-to-decline-0368/

Mining in many areas is also beginning to fall, including in Peru, a
major source of metals like copper, gold, and, of course, silver:

http://www.commodityonline.com/news/Copper-gold-silver-production-down-in-Peru-33052-3-1.html

On top of all this, silver is used in the making of many industrial
and consumer products, including electronics, photography, batteries,
and engine components. This puts an extra strain on silver supplies
that is not felt as prominently with gold. Meaning, the ability of
silver to outperform gold in terms of demand and investment potential is
very high.

Dollar On Its Last Leg

The private Federal Reserve has been injecting fiat into our
financial system for quite some time. The acceleration in 2008 heralded
a new stage, however, in the devaluation of the dollar. Contrary to
popular belief, the bailouts and quantitative easing implemented that
year never actually ended. The bailouts of Fannie Mae and Freddie Mac,
for instance, have continued non-stop every quarter since the mortgage
crisis unfolded. Without a full audit of the Fed’s accounts, there is
no way of telling how much money has been created out of thin air. We
do know that it is enough to drive foreign investors and central banks
out of the dollar and into gold and silver en masse:

http://www.commodityonline.com/news/Why-Central-Banks-continue-to-buy-gold-32803-2-1.html

The announcement of QE2 has compounded the precious metals issue (not
because the Fed is creating more fiat, they were already doing that
unhindered). No, it is because the Fed signaled to the world OPENLY
that they were about to deliberately devalue the Greenback, instead of
just doing it under the radar. They erased any delusions left in the
investment world had that they would try to protect the stability of our
currency. As a result, the dollar index has dropped like a rock into
the recesses of some distant Grand Canyon, while PM’s have spiked.

As gold climbs into the $1500 range, the effect on silver will be
evident. Gold will be less and less attainable by average people with
lower incomes, but these same people will still be exposed to dollar
devaluation, and the need for a hedge against inflation; enter silver.

I believe silver will become the single most important investment of
our age, filling the void in the wage gap gold leaves behind. As gold
shoots into the stratosphere, it will be silver that people turn to most
for smaller investment needs, which means much higher demand and much
greater returns for those who are smart enough to buy now. $27 an ounce
is incredibly affordable, especially when considering that the metal
has the potential to reach $75-$100 an ounce in the next two years (and
that is a conservative estimate).

There is little doubt that the dollar plunge will continue to drive
people towards PM’s. While Ben Bernanke and Timothy Geithner have both
made claims pre-G20 that QE2 is not a move to devalue, the rest of the
world is unconvinced. Reuters recently called the meeting in Seoul,
Korea “G19 plus 1”, as foreign nations become infuriated with the
Federal Reserve’s actions:

http://www.reuters.com/article/idUSTRE6A62BC20101107

Even Alan Greenspan has come out in opposition to QE2, saying it is a dangerous act of devaluation:

http://www.reuters.com/article/idUSTRE6AA00320101111

Now, why is Greenspan of all people suddenly coming out against
blasting the financial system with fiat? It’s hard to say. We have
written here often at Neithercorp about the deliberate destabilization
of the American economy in order to remove the dollar as the world
reserve currency and replace it with the IMF’s Special Drawing Rights
(the SDR). We have also written about the possibility that the IMF
will attempt to insinuate itself into the U.S. system as a “savior”,
implementing supranational control over our fiscal infrastructure, just
as it is trying to do in Ireland today:

http://www.bloomberg.com/news/2010-11-12/shadow-of-imf-spooks-irish-taking-pay-cuts-to-avoid-greece-style-bailout.html

It is perhaps possible that the Fed itself (the institution, not the
people who run it) may one day be offered up to Americans as a
sacrificial proxy to be torn down as the lone culprit of global
collapse, only to then be replaced with the IMF (which is worse, because
they don’t even live in this country). In any case, the dollar is
going for a ride into the backwaters of historical infamy, and it will
take us all with it if we do not protect ourselves from its demise.
Gold, and most especially silver, give us the power to do this.

The Return Of Real Money

While many people in the Liberty Movement are preparing diligently
for the inevitable dollar plunge, some have still not delved into the
world of PM’s, either because they are afraid it will be too
complicated, or because they feel it is unnecessary. Obviously,
survival goods are absolutely imperative, along with a solid plan for
keeping one’s self and his family safe. However, the need for an
alternative economic outlet to take the place of the failing dollar
should not be overlooked, even by the average prepper. A system of
barter is a tremendous starting point for such an alternative, but
eventually, expanded trade also requires some form of currency.
Preferably, one based on a tangible commodity that can’t be recreated to
infinity. Precious metals have fulfilled this role for thousands of
years, outliving every fiat currency ever printed. Of these metals,
silver was always the one most commonly used.

Beans and bullets aside, Americans need a way to protect their
savings from what is coming, as well as a way to support a replacement
market outside of elitist control. There is a reason why central banks
across the globe are stocking up on PM’s; because they know full well
that the dollar’s days are numbered, and they plan to capitalize on its
death. If the banks are allowed to dominate the supply of PM’s, simply
because only a few people had the good sense to stock them while they
were readily available, then our options for a free economy grow that
much slimmer.

There will always be dips, corrections, and fluctuations in metals,
and this should not deter us psychologically from their ultimate
benefits. Every citizen of this country can and should purchase at least
some insurance against hyperinflation and monetary catastrophe, and the
most affordable insurance with the greatest potential today is physical
silver, bar none.

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ATG's picture

Good luck with that

What did one lemming say to the other?

So far so good!

Speaking of utterly silenced:

http://www.safehaven.com/article/5133/the-great-silver-spike-of-1980

tmosley's picture

Enjoy your hard earned dollars.

ATG's picture

Thx tm

Went through this in 1980

Farrell's Rules 1-6, 9&10 may apply here:

http://bigpicture.typepad.com/comments/2008/08/bob-farrells-10.html

Bay of Pigs's picture

You aren't Rich from Ackerman's board are you? Bob Farrell's Rules? LMAO. Another numbskull compares it to 1980. Good luck with that reasoning.

Imminent Crucible's picture

I love these witless silver-bashers.  They always emerge whenever silver takes another leg up, only to be proven wrong yet again.  And again.

I began buying silver when it was just over $4.  My cost basis is so low that silver could get cut in half and I'd still be in great shape.

A silver basher is a guy who didn't have the wit to buy when it was cheap, and now has to try to justify his stupidity.  ATG=Nadlerite=Loser

The Rogue Economist's picture

Nice rules, and completely accurate. But what you're not seeing is that this reversion to the mean isn't in gold, it's in the value if the dollar.

ATG's picture

so far junkers have nothing profitable to say, sigh

dehdhed's picture

maybe according to the point and figure chart but the measured move from the breakout of the huge inverse head and shoulders would be more like 31.   close but not there yet.   and then it usualy just consolidates for a while.   sometimes it retraces about 50% of the breakout move and sometimes it even retests the breakout point if fundamentals don't justify the breakout (but they do).

the main thing is once the initial retest is over, the slope of the move will continue for as long as the pattern took to develop. since the pattern took 2 years to develop,  and if you could extend the chart 2 years,  you could draw a two year projection line that would target the logrithmic scale of like $150 or more, which is pretty freaking amazing.

Quinvarius's picture

See.  I feed trolls.

Michael Victory's picture


nicely organized gio.
we should chat.

~MV

A Nanny Moose's picture

Just don't feed them after midnight. No wait...that's Gremlins

mark mchugh's picture

Dear Numbskull,

If you ever find yourself on the phone with your grandmother who's fifty years in the past (that would be 1960), and she's about to bury a time capsule that you can open now, what would you ask for?

  • Most of the Dow components from that era are long gone, and Apple doesn't exist yet.
  • It's illegal for her to own gold, remember?

I'd tell grandma to bury quarters for me.  A 1960 quarter is worth $4.70 today

http://www.coinflation.com/coins/1932-1964-Silver-Washington-Quarter-Value.html

Minimum wage in 1960 was $1.00 or .715 troy ounces of silver, that's worth $18.80 today.

So, uh...what's in your time capsule?  Woolworth's stock?

And what are you putting in your grandkids time capsule?

A Nanny Moose's picture

+90%. A fellow fan of junk silver. Junking might be a compliment.

Was in a local diner the other day, that has been around since the 1940s. On the wall is a pic from inside the diner ca. 1940ish (forget the exact year). The menu can be seen in the background.

Hot Dog - $0.10

Root Beer - $0.10

Now, we spend the melt value of that quarter on Starbucks.

 

mark mchugh's picture

That first line of yours is gold! er, silver I mean.

Gas was 0.31 in 1960, so that quarter buys more now than it did fifty years ago.

I've got a question for you, if you see this again.  Is there any disadvantages to junk silver coins?  I look at it as melt value is melt value, but .9999 fine stuff seems to command more respect in terms of premium.  Any thoughts?

 

(plus I just like to think about all the places and people the coin's been through.  Crazy stuff, like I wonder where this coin was when JFK was shot and such.  I know, nuts.)

Strongbad's picture

It commands a higher premium because it is more pure and hence easier/cheaper to refine.  Also because the producer has to recover his production costs of creating the .999 bars/rounds while sellers of 90% silver did not pay the US Mint to make the coins for them.  Finally, a 90% coin that has been circulated for 40 years is not going to be its full weight due to wear.

Still, 90% can't be beat for price and reconition factor.

mark mchugh's picture

Thank you for the insightful reply.

SGTbull07's picture

- 1 for not recognizing the blatant 100 to 1 paper manipulation of the metals per Jeff Christian

- 1 for not having the courage to stand with humanity and against the criminal banking cartel

- 1 for your general unsavory flippant Cliff Clavin-like tone

 

Chappaquiddick's picture

SGT - I've just seen your latest posting on youtube

 http://www.youtube.com/user/SGTbull07#p/u/12/KGpi1gxtAOY

Is this for real?  A years output traded in a day?  Could you confirm what that volume was composed of - pure physical or paper only or a mix (if so what was the ratio of physical to paper)??  Are you aware of any equivalent activity on the LBMA??

If you're minded to respond I have another question:  Why do you think that the paper market (which offers cash settlement terms) will crash if there is a commercial signal failure should the exchange be unable to meet physical delivery deadlines/volumes.  Surely both the paper and the physical markets will rise - AND - how could you price these contracts differently, surely the derivative and physical markets influence one another in (supposed) price discovery??

Thanks

Quinvarius's picture

Dollar got slammed today in a down stock market.  So did Treasuries.  Good luck with your deflation fantasy.  I kinda remember explaining this would happen just yesterday.  But you go ahead and declare victory against inflation as silver trades from 18 to 29 to 26.  LOL.  Yes.  Huge victory for deflation has been won thanks to the use of capital controls by the commodity exchanges.

Maybe you should remind us all of your degrees and such that prove silver never went from 18 to 26 and gold never went from 1100 to 1350.  I seem to remember those were the entirety of your deflation thesis.

Shameful's picture

Well hopefully the big boys learned from Bunker Hunt.  Don't buy on margin and take delivery.  If someone anted to run at the system seems that's the way to do it.  Rule changes mid game are a mother.

shortus cynicus's picture

Changing rules by exchange IS A RULE. So, any change is not realy a change, its has to be expected anytime.

Last change will be delivery 'susspention', because of some 'disturbing events' or 'national security'.

FRN is suspended since 1971 and nobody complains about it. So will be COMEX paper too until this 'financial terrorists' demanding delivery are all dead.

flacon's picture

"There will always be dips, corrections, and fluctuations in metals, and this should not deter us psychologically > from their ultimate benefits."

 

Absolutely. Keep on buying. That's the beauty of their 100:1 leverage - it only takes a spark to get a fire going. 

RockyRacoon's picture

No!  Time to dump your metals.

From a pre-eminent "expert" who even quotes Nadler!

Nov. 12, 2010, 5:20 p.m. EST

Why gold is a bad investment       
Precious metal lures susceptible buyers into a Midas crush

By Jonathan Burton, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold does not always glitter, but you wouldn’t know that from surging worldwide interest that has turned the yellow metal red-hot.

http://www.marketwatch.com/story/why-gold-is-a-bad-investment-2010-11-12?siteid=nwhpf

 

But, wait!  There's more:

Gold's rise may end badly for investors

Many investors expect gold to protect their portfolio from economic uncertainty, but gold's recent sharp rise is being fueled by speculation that could end badly for buyers, says Kurt Brouwer, editor of MarketWatch's FundMastery blog.
 Video: Gold's rise may end badly for investors.

mark mchugh's picture

SShhhhhh!!!!!

Can't you just let them beat down the price a little longer?

I'm still holding too much paper!

Jendrzejczyk's picture

This will scare people away from silver---

http://today.msnbc.msn.com/id/22536241

It's worth the click.

unwashedmass's picture

does anyone know how to make a "community page" for Crash JPM, buy silver" on facebook?

jomama's picture

'What I found out is the facial tissues is where the body will store any excess silver.'

 

-Cured his acid reflux disease

-No more sinus infections

-Arthritis went away

 

But is eating it/applying topically worth looking like a smurf?

WhiskeyTangoFoxtrot's picture

But you can't eat silver!  <sarc>

StychoKiller's picture

Just when ya think the World couldn't possibly get any stranger! :>D

saulysw's picture

Now there is a REAL silver bug.

I wonder what color he goes when he's hot? Purple?

tallystick's picture

That's a  colloidal silver scare story. This guy ate silver salts, not colloidal silver,  which isn't  high enough concentration to cause  discoloring.

 

Incidently, this is how the term "bluebloods" originated. Nobility eating from silverware.

asianist's picture

Strangely enough, the blue kind of suits him. The coloring is nice & evenly distributed. He looks a little odd, but not unpleasant. The only problem would be the stares you'd get from strangers.

Spalding_Smailes's picture

It's really funny how VXX got blowtorched for months down 35% last 6-8 weeks before QE 2, then the reverse split put her back in the high 40's....., now the bad news spills forth ....

 

Hmmmmmmmmm...

Turd Ferguson's picture

about as subtle as a fart in church  ;)

 

GoinFawr's picture

Was it Confucious who said,

"He who fart in Church, sit in his own pew"?

mark mchugh's picture

Turd, buddy.

Tell me you didn't print out a chart and scan it back in to post it....

You should be able to right-click most images and "save as"

For anything else:

Hit the "PrtSC" (print screen) button.

Open "Paint"

Hit CRTL-V to paste it into Paint.

Crop and save.

(please forgive me, if that's not the case)

StychoKiller's picture

No, what he did was print out the chart, placed it on a wooden table, took a digital picture of it, uploaded it to his PC, then faxed it to his email address! :>D

mark mchugh's picture

At least 30 seconds of hard laughter!

prophet's picture

My new all-in-one has a shredder built-in.  Now I can shred those sensitive documents just as soon as they are printed.