The Greased Pig

You mention this in your new Thread above.

"Why the Fed pretends to be interested in all of this is beyond me. I imagine they are just attempting to patronize their critics and, once they leave the building, they simply laugh off the criticism, if they even listened at all."

My remarks:

It is my feeling that they are intentionally drawing negative press...not only negative, but scolding attacks.  This:

1) Brings attention to the FED (just like the speeches recently at GW University)

2) Paints them in a negative Mainstream light.

The question is why?

Kcap has an answer.

It is my belief that they will intentionally take it down this year into the beginning of 2013.  The FED (Bernanke and crew) will bring the enemies in closer and allow them media attention.  The FED will then do an "about face" and SEE THE LIGHT and AGREE with the anti-FED crowd.  If you listen to the language lately you can see through all of what appears on the surface.  Also, in my opinion, Ron Paul and The Bernank are in agreement at this point.

Why again?

The FED's 100 year charter is in year 99.  The fireworks of gold and silver were saved for last.  This is why 90 or so years in, (approx. the year 2000) G/S hit the lows they did.  It has been a rebuild and a negative media campaign against them due to the centennial retirement coming up and the MASSIVE TRANSFER OF WEALTH about to happen.  Think about it....why on Earth would they operate in any other fashion?  G/S has to be cremated in the eyes of the everyman, to make sure that this isn't premature....this is why the NY Fed freaked out last May 2011 and sunk the metals using JPM as their proxy.  It was all perfect timing.  Kill the metals and the momentum, ruin the excitement surrounding them, carve out the massive reverse H&S on the chart while maintaining the negative press to get people second guessing themselves and then, as Sinclair says, the reverse vacuum UP sucks G&S to massive gaps up, where hey plateau out and most if not close to all people, are just plain stupified by the move.  This will make a guy like Andy Hoffman look like the smartest guy on the planet as he is the pure bullion poster child. 

And then, the hindsight driven chase begins.  Everyone else tries to get in.

Sounds kind of dramatic huh?  Think again.

I welcome all thoughts but may not get back to everyone.

Kcap

Hi Xty

I claim that silver was more plentiful and cheaper than the face value of the coins, at least when they started minting the coins. Just like coins used to be made out of copper and eventually the copper content was worth more than the copper content of the coins. That didn't last either. I say that silver was more plentiful because back in 1920 (to pick a date) we had something like 4 ounces of silver per capita available in silver stocks. In 1960 there were 2-3 ounces per person on the planet. That has declined substantially, with so much silver being used in non-recoverable ways, for all practical intents and purposes. Now we have about 0.16 ounces of above ground silver per capita, if we accept the mantra (it's debatable) that there are about 1 billion ounces of silver stocks available. let's be generous and double it to 0.32. Heck let's treble it to 0.48. My point is there were large stores of silver in the past and there is simply less silver available today, that's widely accepted.

Look at what has happened to 5c coins in the US. They are being driven out of circulation AFTER the fact, not when they were first brought into circulation. Kyle Bass bought $20 million 5c coins because the nickel content makes the coins worth 6.8c each. http://www.cnbc.com/id/44788851/Kyle_Bass_s_Nickel_Collection

I'm not disputing that silver was currency in the US in 1792. I'm not disputing that Roman authorities established gold:silver ratio. I don't see the relevance to the points I made though. There were no central banks in charge of currency markets in those days. Whether we like it or not, we live in a centrally planned, centrally banked world, and central banks buy gold, not silver. Victor and other bloggers have solid point there.

I'm invested in silver and silver equities (ouch) so hey, if by some chance silver does become a currency again, woohoo. I don't believe it was currency in 1970 for the reasons I gave, and I don't believe it will be currency again, barring total worldwide collapse ala Mad Max.

For what it's worth, I don't think gold will ever officially become currency again either. It might be treated and act as a currency, but I don't believe it will ever be official. I might change my opinion on that as I learn more.

When I said they used silver to ascribe a sense of value to the coins, I believe that a) it was affordable since the silver content was less than the face value of the coins when the coins first went into circulation (this is not disputable), b) more in keeping with history and tradition and aligned with people's historical perceptions of what money was meant to be, especially back then, and as a result c) it had the psychological effect of giving an impression of legitimacy to fiat currency. I'm really speaking for myself here, and I don't have any hard facts to back points (b) or (c), they are opinion. But what is illogical or irrational about that?

Sent you a PM.

HeNateMe

Victor says:

What I don't see is that 'the banks' would systematically manipulate the silver price. Firstly, why would they do this? They are neither short nor long silver, and so why would they fudge the price discovery in an asymmetric fashion? 

?? Why ??

Firstly they would do it because Silver is the Achilles heel of the fiat paper money system - if it were set free it would deal these wholly uncapitalised (infact of course they are monumentally negatively capitalised) banks a mortal blow.  On one level I cannot believe you don't know the answer to that question, it is so obvious as to be a given to anyone who thinks on a strategic level, but maybe you really don't know this.  The footprints of manipulation are all over Silver, visible (even to the CFTC, despite their inability to react) due to its relative lack of market depth and effected precisely because of its role as the point man for Gold, the one who ventures forth to the real front line in the battle against unsound forms of money.  For decades the banking alchemists have managed to keep silver the Knight in a headlock in order to by proxy have a much easier job of subduing his brother the King himself (Gold).

'They are neither long nor short Silver' - what dream did you just wake up from?  Even Blythe as good as admitted in on TV recently and the CFTC know that it is a concentrated and disproportionate position that does affect the integrity of the market.  

'Why would they fudge the price discovery mechanism?'  - Turdville 101 time Victor.

Maybe you don't know 'why' and maybe you do, but either way I suggest you get on and find out as I am confident that I speak for a number of people here who would find this quite surprising!

"a) it was affordable since the silver content was less than the face value of the coins when the coins first went into circulation (this is not disputable),"

When which coins went into circulation?   

Maybe that and fiddycent will buy me a snack-size Baby Ruth.

Had to weigh in on the college discussion.  Hold bachelor’s and advanced degrees, having graduated in or near the top two percent of both classes.  Most recent degree was almost 40 years ago.  Before this all sounds like a boast, I’ll share a comment made by my favorite management professor just weeks before I finished my undergrad.  Addressing a group that included a number of us nearing graduation, he asked, “Do you know what you guys have accomplished over the past several years?  Well, mostly what you’ve done is prove that you’re trainable.”  His comment told me that I’d leave school with a lot of book learning and some basic skills but my degree would mostly be a signal to some companies that it might be worthwhile hiring me to see if I was smart enough to apply them in a manner that would contribute to their success.

Right after undergrad, went into the Army to fulfill my obligation.  After the Army, I’d planned on taking night law classes at a major local university to get my JD.  My childhood ambition was to be an attorney.  Unfortunately, the university in question discontinued night law classes shortly before I got out.  There were no other well-regarded law schools in my area so I pursued my MBA.  Had a good career in business and another good run as a consultant after retiring.  Still, in looking back, I regret not seeing if there might still have been some means to pursue that law degree.  With a law degree, I would likely have pursued the career in politics I hoped for.  Just think.  There but for the grace of God, Ferd might well have become one of the most despised people in the US today.

Seriously, the point of all this is that if you feel compelled to pursue further education, you have a number of choices to make.  If you are intelligent and willing to work hard, you can be successful in many fields, with or without a degree.  But, if you want to find real satisfaction, pursue the field that you are most strongly drawn to and plan your education accordingly. 

Enough Ferdosophy for today.  One of my miners just climbed to within two percent of being back in the green.

Right now we seem to be comparing the value of PM's as measured in fiat, and then complaining about the price being stuck in a rut while also mentioning that silver is not a good store of money due to its volatility (whatever that means). I would hypothesize that it is the fiat that is unstable and volatile rather than the value of the PM.  To truly measure the volatility of PM's their value needs to be compared to a constant, not to the ever declining dollar.  I've often heard that an ounce of gold would always buy a nice men's suit of clothes - now that's a constant measure.  How much gasoline can you purchase for one ounce of silver - both "then" and now.  Same for other staples and commodities.  You will go crazy(ier) trying to rationalize the price movement in PM so long as you (1) continue to try to tie it to a fiat currency; and (2) fail to recognize that the volatile side of the equation is the fiat and not the PM.

Look out, I've been thinking again, and I get dangerous when I start that.

Your chart shows a descending triangle, which is usually bearish. Mine simply showed the channel gold is in at present.

"When which coins went into circulation?"

Off the top of my head, I'd say pretty much every garden variety, government issued standard currency silver coins, in any country, during probably most of the 20th century, when silver was part of the coinage. I'm not talking about coins like Silver Eagles or Maples. I'm talking about the kind of 90%, 80% and 50% coins we still buy in countries all over the world.

I find it hard to imagine coins were ever initially issued into circulation with a fiat currency face value of say $1 but started out with a silver content value greater than that. Eventually, the silver was worth more than the face value in every country.

Where I live, we no longer issue 1c or 2c coins, and 5c coins are in circulation but no longer being produced, because the plated steel is too expensive to mint in those denominations. PLATED STEEL.

You just depressed me beyond all imagining.

I went in and bought 12,200 shares of it at .35 a share, and sold them all at 1.15.  Haven't checked its chart in 2 years.

Only to check it out after you'd said that, to see that if I'd simply held it another 2 years.....my mere $4,000 would now be $113,000.

I'm totally speechless...

Try not to look back.

I know it's a bad feeling but a lot of us can say the same thing about almost any given stock given a certain amount of time to look back upon them. No shortage here of woulda, coulda, shoulda.    200% sounds like a pretty nice gain to me.

Go find the next big one 

Some poor middle manger/engineer is going to take the heat for all of this cover-up, as usual!

Now that you have limited the conversation to coins issued by governments in the 20th century it is different.  I am talking about the historic uses of gold and silver as currencies by free people, when their weight, not their face value was important.  But when the US introduced the silver dollar in 1792, it was tied to an exact weight of silver. I am not defending this, just saying it would have contained 'one dollar's worth' of silver or people woudn't have accepted it.  That the face value and silver content would not align correctly the very next day was probably true.  But when first issued, yes, the weight of the silver and the then current market value of the silver and the issued dollar would have been in accordance.  As for the nonsense that has been inflicted on the world since the creation of central  banking, I cannot answer.

Not quite but almost...