Guest Post: "The Coming Paradigm Shift in Silver"

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Sat, Jan 28, 2012 - 3:59pm

A big thank you to Turdite SRSrocco for sharing this excellent article and allowing us to present its "world premiere" here on TF Metals Report! Please take the time to read!

The Coming Paradigm Shift in Silver

By Steve St. Angelo

The biggest problem for investors today in trying to forecast the future price of silver is the enormous amount of contradictory analysis on the Internet. There are bulls, bears, paper traders, physical buyers, technical analysts, hedge funds, commercial banks and silver manufacturers all trying to play a part in this highly volatile silver market. Trying to sift through the huge volumes of silver analysis on the internet can be extremely frustrating. In addition, some of this information is not meant to inform, but rather to confuse or mislead the investor.

There is a great deal of misinformation on the internet when it comes to silver. I find it ironic that one of the so-called “bullion specialists” seems to give bearish commentary whenever the price of gold or silver rises to new highs. This is akin to a CEO of a corporation telling the media and shareholders that the company’s stock price is too high and needs to drop down to more sustainable levels. What CEO on Earth would say something as stupid as this with the best interest of the company and shareholders in mind? Furthermore, how many CEOs would keep their job if they repeated this over and over for the past several years, and got it wrong time and time again?

Unless you have been in the precious metals markets for quite some time, it is easy to be misled by this type of information. This is the very reason behind the motivation that I had to write this article. In it, I will attempt to give the reader-investor a more detailed and fundamental comparative analysis of the future price of silver, rather than the typical fly-by-night technical charting or bull-bear rant. This should give a more commonsense methodology in forecasting the future path of silver and its eventual paradigm shift.

Paradigm Shift: —n, a radical change in underlying beliefs or theory

The coming paradigm shift in silver will not happen due to technical analysis, fundamentals, or supply & demand forces, but rather due to a change in mass psychology of investors. Even though fundamentals and supply-demand forces will play a part in this shift, they will not be the ultimate cause. I believe technical analysis as it is used today, only charts the amount of manipulation and mass psychology in the silver market.

Throughout history, a paradigm shift occurs in rigged markets when the manipulation of the financial system and economy is no longer sustainable. This occurred in the banking and housing markets in 2007-2008 when we had what I call a “Negative Paradigm Price Shift”a trend where prices or values are declining.

Negative Paradigm Price Shift in Housing and Banking

Prior to 2007, the real estate market was kept alive by the work of clowns and magicians in the mortgage industry and banking system. For several years everyone was having a great time. As housing prices and sales continued towards the heavens, bank profits hit all-time records. Everything was going along just fine until the market realized one day that there was nothing left after “Liars Loans” were levied to keep the Ponzi going. Once the housing market collapsed, so too did the banking system. Like two twins attached at birth, one could not live without the other.

In true waterfall fashion, investment banks, commercial banks, government-sponsored entities and insurance companies went bankrupt, were either taken over or became a mere shadow of their former selves.

Here we can see several examples of a Negative Paradigm Shift:

As you can see from these 10-year charts, the prices of these stocks were range bound prior to 2007. All of a sudden, in the middle of 2007, the bottom fell out and the prices of these stocks suffered exponential losses. Other examples of companies that have experienced similar Negative Paradigm Shifts include Lehman Brothers, Bear Stearns, Merrill Lynch, Washington Mutual and Freddie Mac.

How could all of these institutions collapse in this fashion? It was due to policy deregulation as well as the manipulation of financial products, assets and information. Thus, the banking system and these institutions were functioning and supposedly solvent a great deal longer than a free market would have allowed. The act of misleading the market gave false values and elevated stock prices.

This is a perfect example of the mass psychology of the public investing in highly inflated assets based on superficial and bogus technical analysis. As the housing and financial markets were reaching their peak in the 2007, fundamentals played no part in their real market values— it was based entirely on mass psychology instead; the false belief projected by investors and the corporations themselves that these companies were actually of high value.

This disintegration of the housing market and banking system was not an isolated episode; rather it was part of the events that take place in STAGE 1 of what Dmitry Orlov calls the Five Stages of Collapse.

  • Stage 1: Financial Collapse

  • Stage 2: Commercial Collapse

  • Stage 3: Political Collapse

  • Stage 4: Social Collapse

  • Stage 5: Cultural Collapse

  • According to Orlov:

    STAGE 1: Financial collapse. Faith in "business as usual" is lost. The future is no longer assumed resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.

    Here we can see that the majority of these conditions in the Financial Collapse have already taken place. The only reason why the U.S. banking system is still functioning today is due to the ability of banks to mark to model their assets giving the impression that they are still solvent. Furthermore, the increased guarantee of FDIC deposit accounts to $250,000 as well as a temporary unlimited coverage for noninterest-bearing transaction accounts until Dec 31, 2012 have kept a major bank run on the banking system. These changes of policy have postponed the United States from entering into STAGE 2 or the Commercial Collapse. This will be discussed at the latter part of the article.

    If this wasn’t bad enough, the current U.S. banking system is based on a fractional reserve requirement of 10% in fiat money; basically paper backing paper. This wasn’t always the case. To get a better idea of how disastrous the present banking system has become, we need to take a look at fractional reserve requirements of the past.

    From an Historic Gold-Backed Fractional Reserve System to a Paper Farce Today

    Eric Sprott made a recent comment posted in an article on Zerohedge.com, stating that “The financial system is a farce” . He couldn’t be more correct in his assumption. Not only is the present U.S. banking system based on a financial debt instrument called a Federal Reserve Note, but its fractional reserve ratio is virtually nonexistent.

    In 1932, the United States had a fractional reserve banking system backed by gold. The member banks had different reserve requirements: central reserve city banks (13 percent), reserve banks (10 percent) and country banks (7 percent). All member banks had a 3 percent reserve requirement on time deposits. Even with these official reserve ratios, the total paper dollar claims to gold were much higher. For this analysis, we are going to compare the M2 money supply to the amount of U.S. Treasury-held gold.

    In 1932, the U.S. Treasury held $2.95 billion in gold, there was $5.60 billion in currency in circulation, $36 billion in M2 money supply, and $19 billion in U.S. Treasury debt. The fractional reserve of gold to the M2 money supply was 8.3%.

    Despite the terrible conditions during the “Great Depression”, at least the country had two positive factors going for it: 1) A banking system backed by gold and 2) vast resources of energy, metals and minerals to tap into to pull itself out of its current market ills.

    Today, the banking system is on the verge of collapse and the country has consumed its best resources which peaked 40-50 years ago. After Nixon dropped the dollar peg to gold in 1971, the world has been on a floating exchange rate fiat monetary system. The present fractional reserve banking system we have today is based on a fiat paper reserve.

    This graph shows that no gold whatsoever is backing up the banking system. As the U.S. banking system stands today, its currency— the Federal Reserve Note— is backed by $15.2 trillion worth of U.S. Treasury debt. The system is even weaker when we look into the makeup of the banks’ fractional reserve ratio.

    For starters, the official 10% minimum reserve requirement set by the Board of Governors at the Federal Reserve applies to mainly checking accounts. Effective December 27, 1990, CD’s, savings accounts, and timed deposits owned by entities other than households were not included in this 10% reserve requirement. Additionally, in 1994 the Federal Reserve Board passed a “Deposit Reclassification” for financial institutions to help lower reserve requirements even further. Eric DeCarbonnel explains this in his article “US Banks Operating without Reserve Requirements”:

    Deposit reclassification is an accounting trick, used by virtually the entire financial sector, which allows banks to eliminate nearly all their reserve requirements. Deposit Reclassification splits a checking account into two separate subaccounts, a transaction (checking) subaccount and a non-transaction (savings) subaccount. This distinction only exists on the bank's books: you will never see these subaccounts on your bank statements.
    Deposit reclassification means that, at any point in time, most of the money in American checking accounts sits in invisible savings subaccounts. These savings subaccounts pay no interest, but allow banks to avoid reserve requirements
    . The public is completely unaware of this financial engineering.

    It is now apparent that the so-called official 10% fractional reserve ratio of the U.S. banking system is just a mere figure to delude the public into believing it has a working cash reserve ratio, whereas in reality, the system is a complete farce.

    The public has no clue just how weak and vulnerable the U.S. banking system has become. At one time, the United States had a fractional reserve banking system backed by physical gold money. Today, its financial system is entirely based on a fiat monetary regime with practically no fractional reserve ratio whatsoever.

    Gold & Silver Money Contain Intrinsic Value; Federal Reserve Notes Have None

    Not only is the majority of the public ignorant to the amount of dangerous leverage in the U.S. banking system, most have no understanding of real money. I have had several debates on various websites with highly educated individuals on the subject. Some have replied by stating, “The U.S. Dollar is backed by the GDP of the country”, while others have insisted that, “Gold & silver have no intrinsic value whatsoever.” It is no wonder this country is heading full speed over the cliff.

    In historic times, the value of gold and silver was tied to their rarity as well as the amount of labor needed in extracting and producing the metals. As time went by, capital became a larger percentage of this value while human labor was replaced by energy-consuming machinery. Each gold and silver coin produced today contains a certain amount of this capital investment, energy and labor cost. Thus, these precious metal coins do hold a certain amount of intrinsic value.

    On the other hand, a Federal Reserve Note today has no intrinsic value at all— except for its printing cost. It is only a PROMISE TO PAY. The Federal Reserve Note is not redeemable by gold, but Uncle Sam will give you some of its $15.2 Trillion of U.S. Treasury debt in exchange. It is due to this very reason why we see an increasing amount of Americans buying Gold and Silver Eagles.

    The U.S. Mint does not provide the public with annual records of exact dollar sales of their Gold and Silver Eagles. To get the figures below, the annual sales of silver and gold eagles were multiplied by their respective average yearly price reported by Kitco.com.

    In times of worry in the financial system, the public regains confidence through buying gold and silver assets. During the Y2K scare, we can see that Americans were putting a great deal more money in Gold Eagles over Silver Eagles. In 1999 the public was buying 12 times the amount of money in gold than silver. Today, we see that investors are spending almost the same amount of money in both precious metals.

    The graph above only reveals part of the story. According to kitco.com, the average price of silver in 2011 was $35.11 and the average price of gold was $1571.52. This gives us a gold-silver ratio in 2011 of 45 to 1. If we look at the next graph below we can see just how much more Silver Eagles over Gold Eagles the public is buying.

    It is hard to tell from the graph above, but Gold Eagle sales have increased tremendously since 2007. Here are the exact figures for both:

    During the Y2K scare in 1999, Americans bought a record 2 million ounces of Gold Eagles and only 9 million ounces of Silver Eagles. This was at ratio of 4.4 to 1. In 2011, the ratio increased nearly 10 times as investors bought almost 40 million Silver Eagles while only purchasing 1 million in Gold Eagle ounces.

    Very few individuals have comprehended the amazing trend taking place in the Gold and Silver Eagle’s market. In 1999, Gold Eagle sales hit a record of 2 million ounces. Last year, investors only bought half that amount. However, Silver Eagle sales have increased more than fourfold from nine million oz in 1999 to nearly 40 million ounces in 2011.

    Even though these two graphs give overwhelming evidence on how much more investors are buying Silver Eagles over Gold Eagles, it is only part of the story.

    Comparing U.S. Domestic Gold-Silver Production vs. Gold-Silver Sales

    In my previous article, First Time Ever, Silver Sales Surpass Domestic Production, I explain how Silver Eagle sales are forecasted to be higher than the total 2011 U.S. domestic silver production output (full data on U.S. silver mine production will not be out until April-May of 2012). This is a graph from the article that shows Silver Eagle sales will be approximately 5 million oz greater than U.S. domestic silver production:

    While it is true that the U.S. imports silver to meet its industrial and investment demands, this amount was two and a half times its 2010 mine production. According to the USGS 2011 Silver Mineral Summary, the United States had a net import of 3,240 metric tons of silver in 2010. Compare that to its mine production of only 1,280 metric tonnes the very same year.

    On the other hand, if we look at the USGS 2011 Gold Mineral Summary, the United States had a net import of 160 metric tonnes of gold in 2010 while its domestic mine production was 230 metric tonnes. Here we can see that the U.S. gold mines produce one and a half times more gold than it imports from foreign sources.

    In 2011, the United States is estimated to produce roughly 7.5 million oz of gold (233 metric tonnes) along with one million oz of Gold Eagle Sales:

    Looking at these two graphs the difference becomes extremely obvious. Silver Eagle sales consumed 114% of U.S. domestic silver production in 2011, whereas Gold Eagle sales accounted for only 13.5% of domestic gold production.

    The public is beginning to understand that silver offers a much more affordable way to protect one’s wealth than gold. This realization has now taken a bigger bite out of the U.S. domestic silver production pie than is available. Even though the United States can import silver presently to supply its investment and industrial demand, this situation will change when the U.S. economy enters into STAGE 2 of the collapse.

    When Will the Paradigm Shift in Silver Occur?

    For the most part, Americans are completely oblivious of just how close the country is to a total disintegration of its fiat monetary system. As I mentioned in the beginning of the article, the United States financial system died in 2008. It has been kept alive by policy deregulation, monetary printing, and market manipulation (including derivative manufacturing such as interest rate swaps). These collaborative short term machinations have a lifespan that is diminishing every passing day, while investors who have made the wise decision to exchange fiat money for gold and silver keep wondering how long this manipulation can continue.

    I remember watching Peter Schiff on CNBC and Fox Business between the years of 2005-2007 debating about the upcoming collapse of the mortgage and housing markets. On several occasions, Schiff was the laughing stock on the set as anchors and other guests thought he was simply crazy in his forecasts. By 2008, the laughs had stopped while the country watched as the U.S. housing values began their rapid decline that would eventually surpass the disastrous records set during the 1930’s Great Depression.

    The answer I give to individuals and investors who ask me the question “when will the manipulation end?” is that it will end when the U.S. enters into STAGE 2 or the Commercial Collapse.

    Again, according to Orlov:

    Stage 2: Commercial collapse. Faith that "the market shall provide" is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.

    Despite the forecasts of many analysts of what the U.S. Dollar index or government deficits will look like in the next decade, the U.S. economy will enter into STAGE 2 more likely than not in the next few years. The commercial collapse as described by Orlov is when the whole country will feel the impact of the ongoing economic disintegration.

    This article is long enough and does not have time to go into the three other stages of collapse described by Orlov. It is recommended that the reader go to the link provided at the beginning of the article to get additional information on the five stages of collapse.

    Briefly, Orlov witnessed firsthand the collapse of the Soviet Union in 1989 and then wrote a book titled Reinventing Collapse: The Soviet Example and American Prospects describing these different stages. According to Orlov, a country does not have to systematically go through all five stages of collapse. But when the financial collapse occurs, the commercial collapse is sure to follow. With all things considered, Orlov believes the overall conditions are far worse in the United States today than they were for the U.S.S.R in 1989.

    Currently, an overwhelming majority of the public has not learned its lesson since the collapse of the banking and housing markets in 2008, as they are still heavily invested in the U.S. Treasury and retirement markets. They still cling onto the belief that their paper investment wealth will be safe and provide for them well into the future. The graph below compares the amount of precious metal investment to the total amount of money held in U.S. retirement assets.

    Since the American Eagle program started in 1986, there has been roughly $13.4 billion worth of these gold and silver coins purchased. Currently, the total market value of the GLD & SLV ETF is $76 billion. Furthermore, if we assume a 1% ownership of precious metals by the investment community in the United States, taken from information provided by the CPM Gold Yearbook 2011 (based on 0.7% gold as a percent of global financial assets and adding an estimated 0.3% for silver), we would get a figure of approximately $170 billion in these assets.

    The total value assigned to the GLD & SLV is given as a form of reference and not as a recommendation for investment purposes. All paper claims on gold and silver are not a guarantee of owning the actual physical metal. Some vehicles such as the PSLV and PHYS enable the investor to trade in shares for actual metal (under certain guidelines).

    According to the Investment Company Institute’s third quarter news release in 2011, the total value of U.S. retirement assets was $17 trillion. The breakdown was as follows: $4.6 trillion in IRA’s, $4.3 trillion in defined benefit plans, $4.2 trillion in govt. pension plans, $2.3 trillion in private sector defined-benefit plans, and $1.6 trillion in annuities.

    All retirement plans are based on a continued income stream from the market. There is really nothing backing these assets except the faith that the market will continue to grow and function providing the returns to pay its investors when they retire. However, the financial system already experienced its Negative Paradigm Shift in 2007-2008, rendering growth at its necessary rate to perpetually sustain an income stream under a fiat monetary system now impossible.

    The graph above indicates the degree of mass psychology in the different investments. Presently, the overwhelming majority is invested in the $17 trillion retirement market. Unfortunately, these retirement assets will go the same way that the housing and financial markets did in 2008-2009. It is only a matter of time.

    Gold has been called the “Barbarous Relic”, time and time again on CNBC and Fox Business. There is a certain amount of hubris and ego attached to our present financial house of cards— a paradigm that is coming to an end. Those who believe that gold is a barbarous relic are still drinking that barbarous water, or breathing that barbarous air, or eating that barbarous bread or still cleaning with that barbarous object called a broom. All these so-called barbarous items listed above haven’t changed much since the Roman and Medieval times.

    The constant negative rhetoric of gold in the main stream media keeps the mass psychology of the public away from investing in the precious metals and into increasing worthless paper retirement assets.

    The Coming Positive Paradigm Shift in Silver

    As mentioned before, the paradigm shift in gold and silver will occur when the United States enters into Stage 2, the commercial collapse. This article focuses on silver due to the fact that the majority of gold that has ever been mined is still stashed away nicely in vaults across the world. However, due to silver’s dual role as an investment and industrial commodity, a large percentage of silver that has been mined has been consumed in industrial fabrication and lost forever— continuously diminishing its supply and raising its value.

    When silver performs its paradigm shift, it will behave in the opposite fashion as the first three charts in this article. While AIG, Fannie Mae and Citigroup suffered negative paradigm price shifts, silver will be awarded a positive one. The graph below gives a possible REPRESENTATION OF THIS PARADIGM SHIFT. Repeat… a representation of this paradigm shift:

    The $150 Free Market Price of silver was calculated by inputting the Jan. 1980 high price of silver into the inflation calculator at Shadowstats.com. I realize there will be a great deal of backlash on this $150 figure… so here is the rationale behind it:

    1. This figure was based on the “official CPI statistics”. John Williams at Shadowstats.com has an alternative SGS calculation using older inflation parameters which would make the price much higher.

    2. The manufacturing of trillions of dollars of derivatives has siphoned investment money away from physical assets such as silver, keeping their prices artificially low.

    3. The overwhelming number of paper claims (100+ to 1) on every physical ounce of silver has also sucked investment money away from the physical metal, also depressing its actual price.

    Even though the last two reasons above can overlap in definition, they were separated due to the type of derivatives experienced in the market. The second reason focuses on the tremendous amount of financial derivatives such as interest rate swaps and retirement accounts. The third deals with the silver derivatives themselves— options, futures, pool accounts, silver certificates and silver ETF’s. The possible paradigm price shift of silver shown above represents a trend when the mass psychology of the market becomes increasingly aware of the true fundamentals of physical assets such as silver. The higher the price goes, the more fundamentally aware the market becomes.

    The fact of the matter is that the stocks of AIG, Fannie Mae and Citigroup were garbage and worthless well before 2007. If we were to look at their charts above and draw a straight line from where their current stock prices are today and go back all away across the chart to the year 2002, we would see a fair indication of a free market value.

    Yet, the majority of investors today are still suffering from the same mass psychology that kept the financial and housing markets elevated several years ago. Today, the investor’s confidence is placed firmly in the U.S. Treasury and Retirement markets. These are the two final greatest bubbles in history.

    The U.S. banking system has no real fractional reserve to speak of and its monetary unit called the Federal Reserve Note is backed by $15.2 trillion in U.S. Treasury debt. The global oil supply is peaking and there will not be the available cheap energy in the future to fuel the U.S. economy to be able to pay back these debts or fulfill the obligations of the current $17 trillion retirement market.

    While, the U.S. Govt. and Wall Street may be able to postpone the inevitable for a while longer by printing more dollar digits, issuing more paper treasuries and manufacturing more derivatives, these are temporary solutions. There are other alternatives that the U.S. could opt to take, such as backing the dollar with gold or erasing all the debt and starting over. Unfortunately, these are not the choices that are being considered by the leaders in government.

    The paradigm shift in silver shown above is a representation of a possible trend in the future. Anything can change its outcome in time and price. That being said, when global markets cannot avoid heading into an unavoidable negative exponential trajectory as they presently are, (including the U.S. economic system) changes in price or value move up or down quickly and violently.

    A change in mass psychology will play a big part in the market realization of the true fundamental price of silver. Silver will outperform gold in percentage terms as it will be more affordable to the masses. The majority of technical charting and a great deal of analysis on the internet are nothing more than white noise to confuse and frustrate.

    Lastly, to all the silver investors who are purchasing physical bullion on the dips, remain patient— the silver paradigm shift is coming.

    About the Author

    Founder
    turd [at] tfmetalsreport [dot] com ()

      200 Comments

    The Doc
    Jan 29, 2012 - 11:48pm

    Re: Blythe

    Hmm. Perhaps not so fast. the FT indicates that Blythe is replacing Deutsche's Michele Faissola as head of the GFMA. Perhaps she will stay on as head of commodities at The Morgue and head the GFMA?

    Strongsidejedi
    Jan 30, 2012 - 12:07am

    @ClinkinKY - Yes

    Terrific posting about the GOP primaries and Gingrich's candidacy.

    The GOP has been splintered by the "newbies" who are more liberal in funding and lie like crazy about their ambitions and the "old guard" who are more reluctant to lie but are truly conservative in their ambitions.

    Most people do not understand the inner split.

    Gingrich has been nice to Dr. Paul lately and seems to be courting the tea party crowd.

    So, the three candidates have stopped insulting Dr. Paul.

    They all need Dr. Paul's voters to back them in November.

    Somehow, I am skeptical that the Dr. Paul voters will.

    leeson_was_framed waxybilldupp
    Jan 30, 2012 - 12:15am

    Gordon (Dumb Ass) Brown

    You have to hand it to him though, a move that stupid tipped folks off that things were about to go down hill. Who knows, maybe sombody was holding a gun to his head and said either his brains or his signature would go on he sale contract.

    A.k.a Luca Brazi.

    cdellis Nigel Black
    Jan 30, 2012 - 1:17am

    And then there were 3

    I suspect that the move of Blythe Masters to Deutsche Bank is more to establish the JPM style of futures trading to Deutsche Bank, rather than her bailing out of JPM. Soon it will be not only HSBC and JPM that are the primary manipulators of the precious metals markets but also Deutsche bank aswell.

    Someone on a previous thread suggested that JPM would branch out as a way of circumventing the futures limits that will be coming into effect.

    A couple more banks and the limits will be a moot point.

    Senseosensei
    Jan 30, 2012 - 1:29am

    Kudos

    Kudos to all Turdites. I have been reading about and studying the silver market for 5 years (before that i was in a winter sleep i guess, too busy chasing a career that seems hollow now), but i still find gems of information here, daily. That's a big compliment to Turd and all the Turdites !

    @vamoose1 you crack me up, whenever you start rambling i have to be sure not drinking coffee or it ends up at my monitor from all the laughing :)

    Regarding the endgame: i see this as a game of chess. Blind chess, to be precise. We have a vague clue about the chess rating of our opponents and we think we know who they are (from illuminati to Rothchilds, or just greedy arrogant and stupid "elites"). We see 2 or 3 steps ahead and think we see their game plan and prepare accordingly, but this little voice inside our heads tells us they might be 10 moves ahead....Sometimes we recognizes game patterns from earlier chess games and know how to counter them, but then we are put off balance completely by a piece that they sacrifice, to take back 2 a few moves later.

    My personal exit strategy will be when i have enough silver/gold profits to be able to buy some farmland in a quiet area, with some spare to get all the equipment i need to give the family a good life. I am not one bit interested to gather fiat paper, only to find out later that it will go to zero again, as all fiat currencies do eventually.

    Strongsidejedi Senseosensei
    Jan 30, 2012 - 1:55am

    war game or chess - the game's goal is yours

    Reading Rickard's Currency Wars was excellent.

    I felt like George C. Scott's Patton doing surveillance over the Tunisian battle field, only this time I was holding the binoculars and it was me yelling "Rommel, you magnificent bastard, I read your book!"

    Magnificent Bastard

    ---------------------

    Dollar strong for the next 7-10 days.

    The banks and cartel will have to fill some orders.

    silvermedusa
    Jan 30, 2012 - 2:20am

    Bloody Beatdown!

    Pigatha at work? Will be interesting to see what happens when Europe opens. I have a really bad feeling about this week. And I am not just talking PMs here.

    Hondo
    Jan 30, 2012 - 2:39am

    No more boating accidents...

    No need for those harrowing stories of near misses boating. "My silver vaporized Mr. tax man. What you don't believe it can happen?" "Google MF global. See it can happen." https://www.zerohedge.com/news/3-months-after-mf-global-bankruptcy-we-fi...

    SilverCityRocker
    Jan 30, 2012 - 3:39am

    Shiny the Silver Rocker says... STACK IT!

    Shiny the Silver Rocker says... STACK IT! ...And she told two friends, and they told two friends, and they told two friends, and so on, and so on…

    Lumpy
    Jan 30, 2012 - 4:32am
    SRSrocco
    Jan 30, 2012 - 6:28am

    A FEW MORE REPLIES & COMMENTS

    Again...thanks for the comments. Anything can happen in this paper market. I just looked at this fellas work that may have been brought up in a previous blog. Willem Weytjens wrote this article SILVER EPIC REVERSAL where he compares the Nasdaq chart with Silver:

    How interesting. I have seen this chart as well over and over again:

    I gather Willem expects silver to fall back to $10 just as the Nasdaq chart did. First of all, this is the kind of garbage and worthless analysis I wrote about in the article. Secondly, the Nasdaq was based on DOT.COM stocks that were completely worthless. Little old ladies after bridge club were trading and talking about tech stocks. This was the epitome of a typical BUBBLE. How Willem can compare silver which has been money for over 2,000 years that holds intrinsic value to the NASDAQ just proves my point how much BRAIN DAMAGE there is on the internet.

    Thirdly, Fresnillo (2nd largest primary silver mine in the world) had an overall CASH COST of $5.5 an oz in the first half of 2011. Cash Costs have gone up in the second half which maybe $6.50 an oz. Cash Costs are not total costs. For instance:

    TOTAL REVENUE JAN-JUN 2011 = $1,057 million

    COST OF SALES = $282.4 million

    $282.4 / $1,057 = 27%

    All mines sell their by-product metals for market value (except those who have deals with Silver Wheaton...which are very few). If all mining companies sell their by-product metal for market value, CASH COSTS are completely worthless in the end. Here we see that Cost of Sales was $282.4 million of the total revenue. If we divide the cost of sales into total revenues we get approx. 27%. This is the actual cost of silver.

    Fresnillo sold silver at about $35.74 an ounce average. If we take 27% of this total we get the following:

    $35.74 X 27% = $9.65 total cost per ounce

    So I gather that Willem believes that one of the largest and cheapest SILVER MINES in the world should be selling their silver at $10-$14 an ounce. I have looked at many other smaller silver companies and let me tell you, their total costs range from $15-25. I guess these companies can just shut down production all together if the price got that low.

    Again... this is the kind of LOUSY ANALYSIS that bothers the living hell out of me. When silver finally hits $50, I will be coming out with some very BLUNT articles that show the horrible work of these folks. Williem does say at the end that if silver goes above $38 then the chart is meaningless. AINT THAT GRAND... he covered his arze

    sdstacker....no, that is not my work....LOL.

    Be Prepared
    Jan 30, 2012 - 6:33am

    Dr. C leads the Pullback...

    Copper slipped in moderate volume on Friday after underwhelming US economic growth figures doused a rally in higher-risk assets that had lifted prices of the red metal nearly 15 per cent this month.

    Copper hit, then eased from a four-month high to consolidate above the 200-day moving average, a key technical trend indicator that was cleared on Thursday for the first time since prices fell below the line last August.

    Prices of the red metal still managed to post a third straight week of gains on strong technical momentum, optimism for a conclusion of Greek debt talks and brighter commodity demand prospects from a US Federal Reserve pledge to keep interest rates low.

    Yet with most Asian markets, including the Shanghai Futures Exchange shut this week for the Lunar New Year holiday, analysts questioned the sustainability of the move given China's return next week.

    "There has been an element of re-stocking in China, but I don't this will continue with the price where it is. I think they will be very well tempted to sell into it," said Bart Melek, head commodity strategist with TD Bank Financial Group.

    "I don't expect a huge correction, but a bit of a retracement is entirely possible ... probably toward $3.70."

    <Rest of the Article>

    donnojackshit
    Jan 30, 2012 - 6:41am

    @SRSrocco

    Great job. Love your work. You write clearly and present your graphical information superbly. I understand that in forecasting (as in physics), one cannot predict the event and timing of the event, and get both correct. However, I would still love to hear when you think the "mania" stage might occur, and with the CRIMEX/JPMorgue corruption on paper futures prices, whether if the mania stage occurs with a physical decoupling from paper price.

    ClinkinKY
    Jan 30, 2012 - 7:15am
    ClinkinKY
    Jan 30, 2012 - 7:18am
    ClinkinKY
    Jan 30, 2012 - 7:20am
    GoldMania3000
    Jan 30, 2012 - 7:20am

    @Slartibartfast Rickards Comments

    You've only been a member for 1 day and 11 hours and you post an anti-Rickards comments. I have a feeling you are someone else on the board that has posted about rickards before. That's easy for Turd and his techi to check. Don't have to like him, don't have to trust him, everyone has their own POV based on their experience. I enjoy listening to him because he provide a POV. While some of you accuse him of being a liar or this or that, I can't detect that without a Poloygraph test. Even if I didn't agree with him, I enjoy listen to many POVs that are based in a rationale. I don't always have to agree with the rationale but it provides me with another way of looking at things. Is he part of the esblashiment..i don't know. I think jon nader is more part of that with all his anti-gold propaganda.

    It doesn't matter, I like Rickards and enjoyed reading his book, just like i enjoy many others. And I don't agree with all of them

    ClinkinKY
    Jan 30, 2012 - 7:22am
    Be Prepared
    Jan 30, 2012 - 7:30am
    Purplefrog
    Jan 30, 2012 - 8:15am

    Paradym shift

    All paradym shifts are accompanied by proportional emotional upheaval. See "The Structure of Scientific Revolution" by Thomas Kuhn. It explains why there is such resistance to them, even when the anomalies are staring you right in the face.

    Colonel-Angus
    Jan 30, 2012 - 8:27am
    Sharer
    Jan 30, 2012 - 8:40am

    A couple weeks ago, I finally

    A couple weeks ago, I finally convinced a good friend to purchase PMs. Gold was $1638 & silver $29.7. She was willing to spend 2000 so I helped her with ordering a 'starter pack' from Apmex. (mostly a selection of 1oz silver coins and 1/2 oz gold coin). However on delivery she was required to pay €500 in tax as they were purchased outside the EU. She then came to me looking for answers... "the price of Gold will have to rise by 25% to just break even!!", she exclaimed. On opening her package she looked disappointed and said, picking up the 1/2 oz gold coin 'is that all i get?" (I think she was expecting giant kilo bars of gold and silver like in the movies)...sigh.

    While this €500 tax was deplorable and unexpected, I tried explaining to her about the value of fiat currencies and manipulation of the metals and got a blank look. Frustrated now, and thinking, Without reading my whole library of books and doing the same extensive research I have done, how can people be expected to wake up? these people don't read and will NEVER gain the same understanding. Thus I think this paradigm shift is still a ways off. In essence, it is all fair and well playing with my money, but I no longer want any responsibility with other people's money. And am tired of the scoffing and sneering aimed at me by sheep, when I offer any advice or opinions on the Eurozone, metals, Elites, MENA,. I will now keep my thoughts to myself.

    JoeKa
    Jan 30, 2012 - 8:53am

    Uhm.. @shit

    Maybe its just me, but the first thing that caught my eye was the combination of your post title and your nick in the recent comments box. In short I saw: "A couple weeks ago, I finally collect shit." I know the feeling.

    survivalwstyle
    Jan 30, 2012 - 8:57am

    FYI ~~ charts are not loading in email....

    had two people i sent this....email me saying none of the pics/graphs from the forward uploaded...so i sent it to myself...and sure enough i caNNot sEE them either...i sent them to TFMR for the real thing. just a heads up.

    peace.

    donpaulo exiledbear
    Jan 30, 2012 - 8:57am

    just as an FYI fertilizer is

    just as an FYI fertilizer is primarily produced from Nat Gas using the Haber Process.

    AG related business is a good idea however

    I heard a good story about fertilizer the other day that I will share in the interests of turdville

    over 150 years ago in Japan, higher level students seeking a room to stay during their studies would often rent from a farmer.

    The deal was as follows;

    1 student wanting a room had to pay rent

    2 students sharing the room could stay for free

    3 students sharing the room received a small supplemental income from the farmer

    the reason ? Mr farmer was collecting the pee and turds to fertilize his farm

    zilverreiger
    Jan 30, 2012 - 9:24am

    @GoldMania3000

    Please, I have better things to do than to fake accounts. As for Rickards, he's just one of the many sources online to me, he goes through my paranoia filters like the rest, US government (who are the evil empire) ties score alot of warning points for me, and apparently for some more people around here.

    Sharer
    Jan 30, 2012 - 9:27am

    @JoeKa

    are you smoking too? but nah I've been collecting shit for longer than a couple o' weeks.

    JoeKa Sharer
    Jan 30, 2012 - 9:44am

    Smokin?

    Absolutely!

    The Mask - Smokin
    Be Prepared
    Jan 30, 2012 - 9:48am

    Everyone thought this was an Excellent Article

    and wanted to share it with friends and family....... certainly, you would be able to refer them back to our home here in Turdville so they can get the full experience, but we all know that can be a chore.

    I did a quick screen grap and put together a PDF File of the article so that it can be shared via email.... full attribution was maintained.

    Steve St. Angelo - The Coming Paradigm Shift in Silver.pdf

    Hope this helps everyone!

    Great Job.... Steve... thanks for sharing your insights and expertise!

    Gold Five
    Jan 30, 2012 - 10:24am

    Re: Rickards

    I'm about half-way through Currency Wars. The writing style is pretty dry, but it is good information.

    I haven't seen sufficient evidence to accuse Rickards of being part of the EE. I sorta think of him as the Tom Clancy of economics, and Currency Wars is his Hunt for Red October -- being so eerily accurate that the govt. will be likely to continue to use him as a consultant. Actually, if he had written Currency Wars as fiction I probably would have finished it by now. :-)

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