Physical Silver Investors Are Being Hoodwinked by the Futures Market

asiablues's picture

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Soul Train's picture

Those leveraged short are trembling, since most of them are under water.

They need a V to get them out of their circumstance.

Articles like this are alarmists.

However, anytime something rises as fast as silver has since last year (and especially these past few months), it is normal for there to be some profit taking by speculators and more shorting by the pessimists.

Good perspective by the writer. I say, may the smartest money win.

Look, who trusts the money cartel Federal Reserve anymore? Silver is the wise choice for an alternative currency.

Just remember that the good ole' USA used 100 % silver in their currency until '64/

Anybody remember the exact explanation provided to the sheople back in 64, to remove it?

2500saturdays's picture

ST

I have looked and can't find reference to exact explanation.

There is the coinage act of 65. Notes to the effect that Ag is removed

as it is going up in price and causing a coin shortage. I was not old enough

to remember.

What was the exact explanation?

 

TimmyM's picture

Dian, you say interest rates are going up. Well why don't you run the numbers on what percentage of tax revenue goes to cover servicing our debt at 5.25%.
You say the 30 year average price of silver is relevant like driving by the rear view mirror. But what if we just worked through a 100 year glut of historical monetary supply and no one knows the new price?
Investment fund flows? The total above ground market cap of silver is around 50B. That is nothing if the world decides silver is money.
Fed tightening? Do you really think the credit crises is over? How solvent is Citi? Or any number of European banks?
A glut once prices start to fall? How many Chinese are standing by yearning for something besides paper? How many Indians? You do the math.
Yes silver is in a parabolic rise. But what if the old price was the artificial price? What if today's perception of a parabola is tomorrow's blip before a
geometric move?

This is not some Wall Street sponsored commodity fad. This is mom an pop worldwide deciding what is money.

earnulf's picture

I would agree.   2010 service on the debt was 413 Billion dollars at an effective rate of about 1.5%, at least according to the Treasury.   You add 4% to the interest rate and the cost to service that debt....doubles, to 830 BIllion or so.      

That 413 Billion BTW, was 18% of the entire revenue stream for the government (2.2 Trillion).

And the government says in 2013, revenue should be over 3 trillion dollars (3.087).     That 830 billion interest would then consume 27% of total revenues.   yeah, silver's in a bubble alright.

jm's picture

Not sure why you got junked, 'cuz your points are good ones.

I will say that the gold silver ratio makes is a warning sign.  Also, silver is definitely correlated to GDP... I think everybody here agrees that the "recovery" is taking a bad turn.

So there's better ways to take on a carry trade, and there are cheaper inflation hedges.

Seems that these margin hikes are reducing some serious silver leverage in other parts of the world.

let-them-eat-cake's picture

JPM backhander to the author perhaps?

 

Not bad for an article devoid of facts and evidence. Someone link him to Harvey O.

New World Chaos's picture

You're like Meth Man- flailing at Shadow People.

It took 18% interest rates to cut off the 70s inflation, and that was when America actually built things and had low debt and a much less burdensome government.  If the Fed tried that today, all of Wall St. would be bankrupt tomorrow and the government would be bankrupt the next day.  Zimbabwe Ben might take away the meth pipe for a couple months just so he can make everyone beg for it back, but rest assured, he will bring back the meth because it fuels half the budget.  There will be no rehab this time around.  Within two years, America will be a rancid carcass in a dumpster, with bloated rats squabbling to eat what they can before the garbage truck comes.

You only listed a few nebulous cons about physical silver.  Let me fill in some pros:

  • Inflation protection
  • Tax avoidance via barter
  • Lawyers can't see it, incl. divorce lawyers
  • Immune to forfeiture (unless the pigs waterboard you)
  • Can't run a fractional reserve scam
  • The government can't confiscate it from everyone
  • No financial surveillance
  • No counterparty risk
  • Starves the NWO
  • Will retain value under the new system

Basically, it's broad protection against kleptocracy.  Therefore, as kleptocracy increases, so will the purchasing power of silver.  The best way for the elites to steal the value of our silver is for them to stop stealing everything else...

HAHAHAHAHA

New World Chaos's picture

You will know silver is in a bubble when:

  • SilverOnTheMoon.com raises 10 million oz. in an IPO
  • Max Keiser is Time's Man of the Year
  • Businesses don't accept FRNs but will take silver
  • Paris Hilton, Lindsay Lohan and Snooki all pimp their own lines of silver jewelry on the idiot-box
  • Your co-workers won't shut up about who is going to win "Flip That Eagle" reality show
  • The Dow:Silver ratio reaches single digits
  • Some junior miner buys out De Beers
  • Crammer goes all in
  • Cumming colloidal silver gets you free fucks
  • The government runs a surplus and Wall St. stops the fraud
jimijon's picture

Yea, and I sell the remaining 180 or silver Rounds I had minted. HA!

$52 dollars now.

http://www.mundogold.com

Scubacuba's picture

Silver eagles selling right now on Ebay with bids ending at $56.00 plus 4 shipping...

And then you have the Apmex buying bullion at premiums?

Sure sounds like a bubble ready to burst..

Craigslist here in Seattle had people lisitng adds for buying silver/gold.

I remain on the hold and buy on the dip position.

A russian neighbor told me of his account to witness the death of hyperinflation in his country.. one day buy bread, next day what do you have to trade me............

 

lunaticfringe's picture

This author has no problem spinning opinions into fact and conclusions. In fact, I would argue that we are no better than Greece, that bubbles occur when a far greater segment of the population get involved, and yes in fact- I am a doomsday guy. We are a debt driven fiat system. That is how money is "created" and that true price discovery- fiats intrinsic value- is zero. It is backed by nothing and dollars are created out of thin air. And unlike this article- those are facts.

Arkadaba's picture

And this particular opinion made me laugh out loud:

if worse comes to worse the US will just have to cut back on military spending

IMO, not happening anytime soon

MilleniumJane's picture

+1.  I am open-minded enough to read differing opinions, but the alarm bells really went off when I got to that sentence.  Like the oligarchs are going to kill their cash cow (war) for the sake of balancing the budget *snort*.  Asiablues, that is a big negative on that idea.  Don't you watch the news?  Social programs are always the first on the chopping block.  BTW, did they ever find those billions of fiat dollars missing in Pakistan?

Chuck Walla's picture

And it sure as hell won't be entitlements, votes cost money!

Temporalist's picture

When you rob Peter to pay Paul you can be sure that Paul has got your back.

RoRoTrader's picture

The weekly chart is VERY parabolic since the break of $20 and then $30. With the RSI at 88 hitting a sequence of possibly the 4th (irony) significant price correction dating back to 2004.

Looks exactly like natural gas when Katrina was around.

What is the outcome for economic and social consquences of a sustained break of $50 or a collapse of the USD?

 

 

HomemadeLasagna's picture

The author would imply that the outcome doesn't matter, as the chances are so low:

if you need a doomsday scenario to have a long term profitable trade that you’re going to hold for five years, then you really are putting on a low probability trade.

 

...unless on-the-ground events make the doomsday scenario look like a high probability event.

Scubacuba's picture

SHit....

Buy, sell, buy or sell, buy? Sell?

This is crazy. Yesterday too the moon, today to the floor.

I was watching a report from Mr Mad money Jim Cramer saying today (April 25th) to invest 20% of your portfolio into Gold.....

Tomorrow he will be saying sell......

Twindrives's picture

Asiablues is abviously short silver and can't find any to buy.  Sour grapes.   

Creed's picture

I've seen this movie before, back in January? when the mainstream bought-and-paid-for media began a full court press against the precious metals complex

which crashed it for a week or 2

but I don't recall seeing these kinds of bash postings run on ZH at that time, maybe my memory is faulty

 

1- anyone that has been around the pm market for a few years knows damn well it is overdue for a correction

2- those same folks know the fundamental outlook for pm's is bright as hell going forward for years

Creed's picture

wow...asiablue is the ZH MSNBC mouthpiece

 

critical think your way thru it boys

weinerdog43's picture

Sadly, you have failed to take your own advice.

Creed's picture

Sadly, you have failed to take your own advice.

 

 

sadly, you're a brainwashed product of bought & paid for liberal media- heil Soros!

rocker's picture

Why wasn't this article focused on Gold, Grains, Oil, and Fertilizer.  Talk about bubbles.

My point is Silver has been artificially kept down by the likes of the morque.  It is less of a bubble than all those above.

golfrattt's picture

The real question to be asked is why..?

WHY were you even watching him...??  Cramer is a PRODUCER of bubbles, who then disowns them once they pop...  can you say JD Uniphase..??

He is the prototype crash and burn buy-side analyst. Buy low, buy higher, buy higher still..

oh yeah, and sell at the bottom...

Imminent Crucible's picture

Another question is "Why would I listen to Dian Chu?" In early February, this brilliant "market analyst and economist" said oil was overpriced at $103 and bound to fall. She went on to opine, "as winter ends...gasoline and distillates probably have already seen their highs for the year already." That was February, on businessinsider.com.

Her final gem: " I am here to tell you there are no ‘Values’ in the Physical Silver Market"

No, Dian. You are here to tell us to buy energy stocks and support the sectors you work for.  Major shill fail.

Hansel's picture

I hear you.  Buy, sell, blah, blah.  I'm choosing to ignore all of it.  Nothing has been fixed fiscally in this country, so I will keep on keeping on.

SRSrocco's picture

THERE'S A GREAT DEAL OF BRAIN DAMAGE OUT THERE

Well, it maybe true that silver has taken a pretty steep leg up, to say silver is in a bubble is like saying the dollar is a safe haven (even though many countries you visit now won't take them in restuarants or retail stores).

There is a great deal of brain damage today affecting analysts and their subscribers.  How someone can call silver a bubble when the greatest fiat experiment in history, the US DOLLAR, is well past its expiration date.

Let's point out some REAL BUBBLES...shall we?

* Grandmas talking tech stocks after bingo 1999 = Bubble

* Two McDonalds managers buying a $750,000 house in California in 2006 with no money down = Bubble

* 46.6 Square feet of Retail per Captia in USA 2011 = Bubble

* US Treasury Market = Bubble (ask Bill Gross)

 

SILVER THE NON BUBBLE

Gold hit $1500, and silver just barely hit $50.  Gold is almost double its price in 1980, silver is FLAT.

In 2011, looks like there will be 40 million silver eagles sold in the USA.  If only half of Americans were able to buy, that would be about 160 million people.  If only Americans bought these 40 million, each would get a quarter ounce.  Does that seem like a FRICKEN BUBBLE??

How many people have 401k's, Pension Plans, IRAs, CDs or money market funds?  Probably at least 50-60 million.  But that's not a bubble.  Each American owning a quarter ounce of silver in 2011 is a BUBBLE.

Do you see the Brain Damage here.  Trying to compare Condos to Silver is complete nonsense.  Fuel costs are rising because of a falling EROI - energy returned on invested.  The lower the EROI, the more of a liabilty suburban living becomes.

Silver is a store of value, a Condo is a true depreciating liability....especially when there is plenty of SUPPLY...but very little demand. 

Silver is the opposite.

Folks....there is a lot of BRAIN DAMAGE out there....and it ain't good for you

 

 

Ckashan's picture

 

I'll believe Asia Blue when the FED stops becoming impotent. 

danimal's picture

"Gold is almost double its price in 1980, silver is FLAT."

Please tell me you now why it was that high in 1980. You can't possibly use that price in you analysis.

rocker's picture

If you apply the same ratio silver should easily exceed $ 90.00.

SWRichmond's picture

From the OP: We spend like drunken sailors, and that can be fixed.

Describe the makeup of the citizen political majority in the U.S. for a balanced budget.  List their accomplishments.  For extra credit, list the mass media outlets who are on their side and who support slashing both welfare (corporate and individual) and warfare.  List the members of the veto-proof majority that make up the "Tea Party Caucus" in the U.S. Senate.

That's the problem with unsubstantiated statements of "fact."

Modern Money Mechanics's picture

Ted Butler - April 23, 2011 - Weekly Review

Given the surge in volume and price action in SLV ... silver is going out when it should be going in...

Yes, we are at what many would consider the nose-bleed territory of high prices in which a sell-off should be expected, but the actual data rolling in still is supportive of higher prices.

Since silver was ultra-depressed in price by the ongoing manipulation, the price of the call options was always cheap... Unfortunately, ... I did run out of money on many occasions ... caused great financial hardship to my family and I deeply regret putting them through it...
The good news is that my cumulative options loss of two decades has been offset by many times in the rally since August.

silver call option sellers ... in the two-decade-life of the silver manipulation... the sellers took in the buyers premiums and never had to pay out any claims... silver option sellers... range from individuals to large financial trading companies...

The only real solution for the remaining silver option sellers may be to quit the business completely and buy back or neutralize their open exposure to a further rise in silver prices... the financial and emotional stress to these short sellers is such that it increases the odds of a silver price explosion.