Guest Post: The Value of Silver by MiningStockValuator.com

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Fri, Jan 11, 2013 - 10:29am

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The Value of Silver
Written by the MSV Team
Dec 19, 2012

Whether you know it or not, silver probably plays a big part in your life. With the new high-tech era, silver can literally be found everywhere. It's in your iPhone, your new LCD TV and laptop, and you're staring at it when looking at yourself in the mirror. This is a result of silver being the best conductor of electricity out of all metals as well as an excellent reflector of light. Silver has gone from limited industrial use in the photography sector to one of the most crucial ingredients in modern technology. Many experts claim that silver is the most important metal we have, as our way of life wouldn't be the same without it.


You are most likely aware of silver's outstanding price ascent over the past 10 years, but what is really driving the current bull market in silver and how far will it go? And is there such a thing as a fair value of silver? In this article we will try to delve into most of the factors in the tiny silver market and try to at least get an idea of how to answer such questions. We will also make a lot of historical comparisons, since history, as Mark Twain once noted, does not repeat itself, but it does rhyme.

Silver as money

Silver was first mined some 6,000 years ago in today's Turkey. It has since been used for mainly two things: jewelry for its beauty and transactions for its wide acceptance as money. The first silver coins were minted around 600 B.C. and silver has throughout history actually been used more often and widespread than gold in transactions.

The apparent reason seems to be silver's suitability for daily trade compared to gold's much greater purchasing power per unit of weight. The chemical symbol for silver is "Ag" derived from the Latin word "argentum" which translates into "money". That should say something about the extensive history of silver considered as money.

The British and Roman Empires are two examples in history of silver being utilized as money. The two powerhouses of today's world economy, the U.S. and China, are no exception. Silver was regarded as legal tender in the U.S. from 1792 up until 1873 when the country abandoned the bimetallic standard for a gold standard.(1) China finally abandoned the silver standard in 1935.(2)

Supply and demand
Despite an almost 10-fold increase in the price of silver over the past decade, the mine supply has only risen a modest 28%(3). One reason could be the many years it takes to bring a new silver discovery into production, but it doesn't explain why we're still not seeing any notable boom in new mine supply today.

A more important factor has to do with how silver is mainly produced. There are very few pure silver producers out there and most of the silver production is in by-product form from mines targeting industrial metals like copper and zinc. The price of silver only plays a minor role in these mines' profitability, so a price spike might not necessarily mean a corresponding incentive for the producing companies to raise their output. On the other hand, a slowing world economy and lower copper, zinc and lead prices might lead to a drop in total silver production.

On top of that, the whole mining industry has been hit with huge increases in production costs due to more expensive energy, labor and equipment. Diminishing grades contribute to the rising costs as the mines have to process more ore to produce the same amount of silver. So even with the long-term trend of silver prices intact, we will most likely not see any huge jump in production in the foreseeable future.

source: [https://www.silverinstitute.org]

As the chart above shows, photography is no longer a major factor for demand while industrial applications are soaking up a big chunk of the available supply. This trend should accelerate as hundreds of millions of people in emerging countries are making their way into the middle class, wanting the latest mobile phones and 50 inch TVs. "Green energy" is also a big contributor to the rosy future of industrial demand as solar cells and windmills are very silver dependent. Silver's industrial demand is also less linked to price than many other raw materials due to the small amounts used in various applications. A TV manufacturer could easily offset the effects of a doubling of the silver price by raising the price of TVs by $40 - hardly enough to scare off the public from getting a new flat-screen.

Investment demand has been the big gainer over the last decade with an astonishing increase of almost 1900%(4). Many Asian countries have traditionally been more inclined to put savings in precious metals than their Western counterparts. China is now openly encouraging its people to put savings into gold and silver, while the second most populated country India sees a lot of people turning to silver when the more expensive gold is knocking on the door to $2000 per ounce.

ETFs and other investment vehicles have made silver more accessible to the man on the street. ICBC, China's and the world's largest bank in terms of market capitalization, made a game-changing announcement when they opened up the gates for clients to buy silver products via their personal bank accounts. The following statement(5) was made by the ICBC a few months later:

ICBC silver trading service for personal account enjoys blistering growth since the launch in August this year nationwide. Transaction volume and amount grew by several times every month. ICBC set a new record in November by having a jump of 191% over previous month to 4852 tonnes in transaction volume and an increase of 231% over previous month to RMB 27.888 billion in transaction amount. By the end of November, a total of 7167 tonnes have been traded by ICBC customers through silver trading service for personal account.

Add that several futures exchanges recently have launched silver futures into the mix and the growing investment demand is here to stay.

Historical relationships
Most of the participants in today's markets have little knowledge of historical patterns and their implications. To understand the future one has to understand the past. So, what can history teach us regarding silver?

To answer that question we will open up the records and compare the value of silver to several important indicators now and then. We have also chosen to have a closer look at the years 1960, 1980, 2001 and 2012. 1960 to show how things were before the last bull market of silver took off. The peak of 1980 should give a hint of what signals that mark a top. 2001 marks the start of the current bull market and 2012 is simply this year.

Though sometimes a bit misleading, the nominal silver price in U.S. dollars is what people see. During the two decades of the 1960s and 1970s the price of silver blasted from below $1(6) per ounce all the way to $50(7) in January of 1980, a 54-fold increase. A similar appreciation today would ultimately drive silver from the 2001 rock bottom(8) of $4 per ounce to above $200.

But to set a goal of the silver bull market solely based on a previous increase could be a bit misguided. There are many things affecting the outcome, not the least of which is the supply of the currency that silver is priced in – a factor covered more in depth later on in this article.

Silver vs. Gold
The relationship to gold is often considered an important factor in the calculation of a “fair value” for silver. In the earth's crust there is roughly 19 times more silver than gold, a relationship that has often been reflected historically, as silver on average has been considered to be worth somewhere between 1/10 and 1/16 of gold's value.(9) A commonly used term for this relationship is the gold-to-silver ratio or the GSR.

Gold's little brother more than doubled its relative value to gold during the last precious metals bull market and the GSR finally bottomed out at 17:1, using the London fix for gold and silver prices. Today we are seeing a ratio of approximately 51:1, not much of a drop since the GSR stood at 67:1 at the birth of the now more than a decade-long uptrend. It has been down testing lower levels though, and as recent as early 2011 it made it all the way down to around 30:1.

There are other factors in support of a smaller difference in price. Produced silver in 2011 only surpassed gold(10) by 8.5 times which also speaks for a ratio close to the historic range of 10:1-16:1. A look at the current value of all above ground gold and silver gives an even more skewed picture of today's ratio.

Most of the nearly 5.5 billion ounces of gold ever produced(11) is still around. Even with an assumption of nearly 30% vanishing throughout the years, the approximate 4 billion remaining ounces make up an impressive market value of almost $7,000 billion or $7 trillion. The same number for silver using a generous number of 1 billion ounces above ground is $34 billion or 1/200 of gold's value at today's prices.

As silver has been more plentiful than gold throughout most of history, one could easily argue that with today's setup, the gold-to-silver ratio should reverse back closer to the historical norm, despite the current lack of official monetary status.

U.S. GDP
The Gross Domestic Product is the total value of all goods and services produced during one year. If the current economic deterioration were to continue and silver's monetary heritage comes out in full swing, comparing silver to a nation's GDP makes sense.

source: [https://research.stlouisfed.org/fred2/data/GDP.txt]

In 1960 it took 576 billion oz silver to buy the U.S. GDP. Two decades later that number was down to 55 billion ounces – a more than 900% increase in purchasing power in terms of the GDP.

The following 21 years resulted in a drop of 98% since the 1980 peak and if you 2001 wanted to exchange your stacked silver for the entire GDP it would cost you dearly: 2549 billion ounces.

Using the latest GDP number released by the St Louis Fed in July 2012 you get a lot more GDP for your silver and if you have 457 billion ounces lying around, you know what to do.

To get back to old peak levels around 55 billion ounces, silver needs to gain another 700% compared to the GDP. A heavy fall in the GDP seems unlikely with the easy money policies still intact, so it is probably up to silver to catch up.

The Money Supply
As more and more savers buy the white, shiny metal instead of putting their cash in the bank, it is definitely worth having a look at the amount of money in the system. After all, an expanding money supply means more dollars that can buy silver.

We will have a peek at the M2 money supply, especially since the Fed stopped reporting the M3 figures some years back. M2 includes currency in circulation, traveler's checks, demand deposits, other checkable deposits (OCDs), time-related deposits less than $100,000, savings deposits and retail money-market funds.(12)

source: [https://research.stlouisfed.org/fred2/data/M2NS.txt]

Measured in silver, the M2 money supply of the U.S. stood at 329 billion ounces in 1960. Twenty years and a stagflationary crisis later you got approximately 30 billion ounces of silver for the entire U.S. M2 money supply; an even more impressive achievement when keeping in mind that the M2 quintupled over the same period from below 300 billion dollars to almost 1500 billion dollars.(13)

The present bull market once again shows how silver is rising faster than the output of the digital printing presses. A M2 money supply equal to 1,315 billion (1.315 TRILLION) ounces in November 2001 has turned into 293 billion oz of silver by September of 2012. In other words we're currently seeing the levels we had in 1960, before silver had even started to take off.

Without any further increase in the current M2 money supply of $10,200 billion(14), today it would take a silver price of $340 per ounce to copy the ratio between silver and the M2 money supply back in January of 1980.

Labor
The most consistent demand in the history of markets is perhaps the demand for labor. In a way, the cost of labor priced in silver might be the most appropriate measuring stick when determining a fair value.

Back in the old days, how much silver did a hard worker in the U.S. earn in exchange for his blood, sweat and tears? And what does he make today?

Old wage statistics reveals the significant purchasing power silver used to have. From 1761 to 1860, the average laborer's salary was 87 grams or roughly 2.8 ounces of silver per week.(15) This amount had to be enough to cover a family's weekly expenditures on food, housing, clothes etc. - something you could hardly do today with 87 grams of silver and the corresponding value of less than $100.

sources:
[https://www.iisg.nl/hpw/data.php]
[https://fraser.stlouisfed.org/publication/?pid=60]
[https://research.stlouisfed.org/fred2/series/CEU2000000011]


Scrolling forward a century to 1960, the value of silver had dropped significantly and a U.S. construction worker cashed out 130.8 ounces of silver a week.

While salaries continued to rise in dollar terms during the next two decades, it was not the case from a silver perspective. The decline of salaries measured in silver did not stop until it reached 6.8 ounces per week in early 1980, a decline of almost 95%.

A similar trend seems to be in place since 2001 when silver might have reached an all-time low in terms of salaries. A week of work rewarded the same construction worker with $720(16), equal to 177 ounces of silver at the time.

In September of this year, that paycheck has risen to $1021(17) – a sweet 42% increase. However a worker's joy might turn into disappointment if silver once again is added to the equation. $1021 bought a lot less silver in the fall of 2012 than $720 did in 2001, only 29.3 ounces to be more precise.

Still, there's a lot room left for silver to catch up to get back to the levels seen in 1980, not to mention the historic relationship between silver and U.S. salaries.

The Future
You could argue that the forces driving the value of silver higher in the past are back with a vengeance and even more apparent today. The economic imbalances of today are unprecedented, so it is hard to see the escalating investment demand going away anytime soon. Industrial demand for silver has a bright outlook as well as it is one of the most crucial metals in the new technology boom.

At the same time, the world is a smaller and more integrated place today than it was 32 years ago, and a lot more people have access and the means to participate in the silver market. If the current trend continues, it won't be a question of if, but rather when supply no longer will keep up with demand.

After studying all the prior relationships between silver and various historical and present data, is it possible to draw any conclusions as to where silver prices will go over the coming years?

Setting an ultimate target for silver in dollars is nothing but a wild guess and something we will leave for others to do, but history hints that the metal should increase its purchasing power at least fivefold in relation to salaries, the U.S. money supply and the U.S. GDP before this run is over. We see no reason to disagree.

Sources:
1. [https://www.enotes.com/coinage-acts-reference/coinage-acts]
2. [https://www.globaltimes.cn/business/world/2009-07/446855.html. ]↩
3. [https://www.silverinstitute.org]
4. [https://www.silverinstitute.org]
5. [https://www.icbc.com.cn/icbc/sy/]
6. [https://www.kitco.com]
7. [https://www.lbma.org.uk]
8. [https://www.lbma.org.uk]
9. [https://articles.businessinsider.com/2011-03-30/markets/30094444_1_silve...
10. [https://www.bloomberg.com/news/2012-04-05/top-10-gold-producing-countrie...
11. [https://www.numbersleuth.org/worlds-gold]
12. [https://research.stlouisfed.org/fred2/series/M2]
13. [https://research.stlouisfed.org/fred2/data/M2NS.txt]
14. [https://research.stlouisfed.org/fred2/data/M2NS.txt]
15. [Global Price and Income History Group - https://www.iisg.nl/hpw/data.php]
16. [https://fraser.stlouisfed.org/publication/?pid=60]
17. [https://research.stlouisfed.org/fred2/series/CEU2000000011]

About the Author

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

  191 Comments


Jan 11, 2013 - 11:48am
CaribSurfKing azzatack
Jan 11, 2013 - 11:52am

@azzatack Well said!

2 years starts to get a bit ridiculous to wait, when you see uneducated sheep kicking your ass in an S&P 401k index etc...

Also, your right, for a stacker to make a great return, the prices of everything else have to skyrocket, which means depression!!! Which nobody wants for anybody!

So either

1. We maintain our purchasing power with PM's offset against housing/other depressed asset classes etc... and sheep are starving!

2. We get hosed with PM's vs S&P indexes and our salaries still mean something and nobody is starving, but we are less wealthy that the sheep as PM's do nothing!

3. PM pushers still make 10% margins selling and buying PM's no matter 1 or 2 happens!

The moral, become a PM dealer, and keep laughing!

Urban Roman TF
Jan 11, 2013 - 11:53am

monkeyshines

On the other other hand, it could just be another naked synthetic short-long-don't-care from the infinity-to-one leveraged bullion banks, n'est ce-pas?

Response to: however

CaribSurfKing DayStar
Jan 11, 2013 - 11:54am

@DayStar I want to agree, but...

...I have been hearing this story now since I was born!

You can only wait so long, while you watch sheep outperform you financially!


Jan 11, 2013 - 11:57am

link

But, of course, the metals sell off because some Fed Goon is trotted out once a week to convince everyone that QE will end this summer. What a farce it all is!

https://www.zerohedge.com/news/2013-01-11/us-q4-gdp-25-sub-1-under-six-months


Jan 11, 2013 - 11:59am

tyberious

Please try posting that again but just the link this time. Thanks.

tyberious
Jan 11, 2013 - 12:02pm

Kevin Bambrough

Kevin Bambrough: President of Sprott Inc.; CEO of Sprott Resource Corp.

https://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/1/11_Kevi...

LOL! I had eye surgery yesterday and I'm working with one functioning eye. Sorry .-)

Terp
Jan 11, 2013 - 12:03pm

USDA Report

USDA Report right now.

Not sure what's said, but Corn is looking good - Beans not so much... yet

.

So It Goes
Jan 11, 2013 - 12:06pm

ASEs

Just looked at the US mint's website.

https://www.usmint.gov/mint_programs/american_eagles/?action=sales&year=...

4.63 million silver eagles now sold in January.

Spoke with Hannes Tulving - he said his total sales for the 2012 year are less than 2011, but still quite robust.

Keep stacking.

Terp
Jan 11, 2013 - 12:07pm

Corn

01-11 09:06: U.S. Corn Futures Up 2% As USDA Stockpile Estimate 10% Below Expectations
Terp
Jan 11, 2013 - 12:07pm

Soy

01-11 09:06: USDA Reports Lack Surprises for Soybeans
Larry
Jan 11, 2013 - 12:08pm

Don't let it bring you down...

It's only castles burning.

Think on it, these blatant non-economic waterfalls are aggravating and outrageous, but they are like depth-gauges of desperation. Sad part is, the scoundrels and their MSM sock-puppets will succeed in scaring off weak hands and those that have no idea what it all means. On the surface, if I hadn't taken the time to study the monetary system, the games played, the crisis ahead and if I didn't know what I know, there is no way that I would consider buying gold or silver.

But we do know. That makes us a pretty unique minority. When "fire" is yelled in the theater (for the umpteenth time) and so many people once again runs for the exits or stands outside glad they didn't go in, we will sit, not always comfortably, but sit we will until the final curtain closes and we are rewarded to the degree to which we invested.

So, with that in mind, I'm reminded of how thankful I am to have been introduced to the world behind the curtain that has blinded so many. Thanks to people like Jim Sinclair, Dan Norcini, Turd and others (and many of you tireless ones here), for being ever watchful and bringing knowledge to the group here.

Since they chose to waterfall again, they've inspired me to go over to the LCS and pickup more bargains. Makes me happy. I feel a song coming to mind...

Neil Young - Don't Let It Bring You Down - YouTube

Cleburne61
Jan 11, 2013 - 12:09pm

Hilarious silver story...

This is a travesty, even my 3 year old boy knows full well what "Good money" and "Bad money" are(we've even found crumpled up paper dollars that he apparently threw in the trashcan, cuz he said 'they're bad').

Via Simon Black:

Just a quick note today... a funny story to end the week.

Like you probably do, my friend Larry keeps a large change bucket. Every night, he drops in a few coins that he might have picked up throughout the day... and gradually, it accumulates.

Every now and again, Larry takes his change bucket to the bank to use its automated coin machine. You put in the coins, and the machine spits out bills (or deposit slips).

Now, Larry is a worldly guy, and he travels frequently. So occasionally a coin from Canada or Europe will have made its way in to the coin bucket. But these machines have a very sensitive tolerance, and any 'bad' coin is rejected.

Larry emailed me the other day telling me about his most recent bout with the change machine:

"As expected, it kicked out a Canadian penny, a coin from the Netherlands, even one of those souvenir fake pennies that people pay to get inscriptions on. Then, a US quarter as well. And I laughed, because it was from the early 1960s back when quarters were made from real silver."

The machine rejected Larry's silver quarter as "no good"... a very perverse example of how far our society has devolved from the concept of real money.

treefrog
Jan 11, 2013 - 12:09pm

slw

something just lit a fire under silver wheaties! short squeeze? news? some of each? other?

indosil
Jan 11, 2013 - 12:10pm
Larry
Jan 11, 2013 - 12:16pm

Terp

This came to me from a Commodities broker I've dealt with for a while. I don't trade these, but maybe it'll mean something to you:

The US Department of Agriculture and World Agricultural Outlook Board will begin issuing its major USDA grain report at 11:00am CST today. This is one of the major grain reports of the year. The December ending stocks report for corn has created a limit move in one direction or the other in 5 out of the last 6 years. With corn stocks expected to hit a 9 year low, stocks dwindling at the fastest pace in 17 years, and the fact that the report release has been switched to 11 o’clock central time - grain traders better be prepared!

What makes this report so volatile is that all the ending stock and demand data has to be balanced with crops in the southern hemisphere. While it is known that US stocks are at a 9 year low we have seen upward expectations from the Brazilian corn crop harvest, which has risen by 290,000k MT to 72.2 MMT. That was lower than earlier estimates, but it is possible to see an more increased upward revisions as weather is improving. That may be hurt by a faltering crop in Argentina which is expected to be revised lower by 1.5 million metric tons.

Expectations according to Dow Jones for 2012-13 U.S. -- soybean and corn production estimates average and range.

In billions of bushels:

Average Range USDA Output
Corn (22) 10.626 10.100-10.801 10.725 12.358
Soybeans (22) 2.999 2.922-3.104 2.971 3.094

YIELD:
Corn (22) 122.4 121.0-123.4 122.3 147.2
Soybeans (22) 39.6 38.6-41.0 39.3 41.9

Art Lomax
Jan 11, 2013 - 12:17pm

Thanks Terp. Wheat up on

Thanks Terp.

Wheat up on lower than expected stocks and acres.

Corn crop a little larger but Dec 1 corn stocks on the low side. Ending stocks on the low side. Bull spreads working in corn.

sam777
Jan 11, 2013 - 12:17pm

Not worried about the ecnomoy

"Thursday, January 10, was a historic day for Chrysler as the first SRT Viper rolled off the production line at the Conner Avenue Assembly plant and was handed over to his owner, Scot Thomas, by Fiat-Chrysler CEO Sergio Marchionne. Thomas was the winning bidder for the #001 Viper at last year’s Barrett-Jackson auction. The 40-year old, who lives in Oklahoma, is the president of the APMEX precious metals company and paid US$300,000 for the car, the proceeds going to the Austin Hatcher Foundation for pediatric cancer research."

https://carscoop.blogspot.com/2013/01/first-srt-viper-rolls-off-assembly...

Groaner
Jan 11, 2013 - 12:24pm

When is the last time we had an up day on Friday?

my miners are doing pretty good considering this Ludicrous take down..

DayStar CaribSurfKing
Jan 11, 2013 - 12:30pm

RE: PMs vs SnP Indexes

CaribSurfKing, I remember sitting in my cube one day and glancing at the Dow on my screen, and my jaw dropped. In less than an hour it had plunged over 1000 points. This was out of the clear blue. I heard people in the office say, "My broker was supposed to protect me from this!" But they didn't. Things just moved too fast. TPTB are completely in control of paper. They can tank the Dow or S&P at any minute they choose. They will do so when it suits their purposes and not until then. If you think you are smarter and faster than an algo when they choose to pull the plug, good luck with that. I know a bunch of people who thought they were but got a real dose of reality when the Dow flash crashed. They can even devalue the dollar over the weekend, and you will not be able to do anything to your account, because the system will be closed down while they readjust values. They can seize your trading account like MFG and PFG, and where are your paper assets then?

If you are trying to have bragging rights, then you have the wrong idea. The idea is to protect wealth and maybe be relatively wealthy if you survive, or at least have enough for a grubstake. The idea is to prevent catastrophe, not get rich quick. The S&P has done better than just about anything else because that's where the PPT focuses the money to keep alive the illusion that all is well. The PMs have not done as well as the S&P by design in order to prevent a gold rush. Besides, depending on where you bought, PMs were both up even over the last two years a whole lot better than money in any kind of savings and better than 99% any place else you could have put your money. If you were unlucky enough to put your money in PMs when they were much higher, that's the rub of the green, but the fundamentals have not changed since you made your wise choice to buy PMs. Supply and demand cannot be denied. We are already seeing real (not paper) PMs commanding much higher premiums, if you can find them. IMO, you won't have much longer to wait. Something evil this way comes.

DayStar

Galearis
Jan 11, 2013 - 12:35pm

Paper is tanked again....

Or a walking, talking, typing contrarian indicator speaks again. I know all the arguments about manipulated markets don't persevere, that the paper gold market is still influenced by fundamentals (that really blows credibility), that market forces will ferret out real value in time. So the paper gold markets are probably different is what the pundits maintain. Could it possibly be that these pundits miss the point of this statement: "The paper gold markets aren't manipulated; the paper markets ARE the manipulation"...(Rhody's statement from the Kitco Forum is still the best one to sum up this reality.) If a market IS a manipulation, then it ends when it no longer manipulates. It simply goes away, discarded like old newspaper garbage by decree by the bankster controled government that implemented it in the first place. The paper markets are institutions, not markets and that would be the point that the TA pundits seem to miss. For sure JPM and the rest of the crooks are snickering a lot at the chumps out there treating these markets as real. But perhaps not as loudly now with physical supplies allegedly shrinking. Also clear is that they are not going to protect the dwindling supplies of the stuff by allowing a price rise....They are seemingly not concerned about the damage to the mining industry - or the growing strategic damage to their war machine from the shortage of silver. This is an important point in that it shows that the banksters needs trump the growing weakness for national defence of the US...Or could it be that the importance of silver to the electronic support of our civilization is misunderstood and therefore dismissed? Silver is uniquely vital to all sophisticated electronic devices from refrigerators to cruise missiles and that the curtailment of supplies of silver will take down whole manufacturing sectors including those involved in defense. How does our world deal with the loss of ever increasing costs for technology? Or tech infrastructure failures? We, at least, are seeing why periodically cultures take their bankster groups out and hang them from lamp posts! So I still find myself expecting nothing to happen to these suppressed prices until there is a default, or the Chinese open the mint,,,etc. etc. etc....I hope I am wrong. I see that maybe the correction is showing signs of ending....Gold was pushing $1680 and the predictable reaction today has taken it all back....and well, what is normal for this market is for another intervention to defend $1700 gold and now we have it... Turd and community is still thinking in terms of process of chart behavior - and that the market forces still apply and will see the spot price climb...He may or may not be right, but I think you will agree that we can probably expect a lot slower rise - maybe like we saw way back in 2000 and 2001. I think he fails to realize that they are not trying to hide their activities anymore - that the collapse of Empire is showing us that criminals are in charge of the West. And inexplicably most of these (credible) TA folks still agree that the open interest will fall as investors flee,,,,and yet they still insist that the market will rise even as the control by the banksters is augmented with the decline in the market....To me this just means that the arbitrage will increase between West and East and lots of metal will leave London...This to me is akin to the period when France made a run on the USA treasury gold and Nixon had to make that decision to close the gold window with the failure of the London Gold pool....We are still waiting to see if the present is a metaphor for 1971. I suspect it is and I suspect the West is about to see the last of its gold reserves go east in this year or next... The statement that "COMEX will slowly be made irrelevant as this process gains momentum". I don't think it will. The shenanigans will just get more extreme and the East will play the manipulators for the metal. THEY will insist that the spot price of COMEX is REAL. And that will end when the metal does. They are stacking too and the fiction is to their advantage. And all that means is that the dollar price for gold and silver should be ignored and (as Turd keeps saying) "keep on stacking". FWIW, G.
DayStar CaribSurfKing
Jan 11, 2013 - 12:39pm

RE: Since the Day I Was Born

CaribSurbKing, assuming you are more than 2 years old and have been stacking since you started hearing the PM story, there is no way you can be underwater. Gold and silver have gone up hundreds of percent over the last 12 years. Perhaps your complaint contains a hint of hyperbole? Certainly the long term story for PMs is decidedly not glum. It doesn't make me happy to see the bankers trash the PMs, but it shows they are in control, and it shows what they are doing to the financial system, and it shows how much you need to be in the PMs that they will protect at all cost, because PMs are their money.

DayStar

tobydaniel
Jan 11, 2013 - 12:46pm

Turd, people dont really think QE will end this summer

What they will do is make silver plummet every time they say that QE will soon end. They will milk that as far as the eye can see. The only think I am looking forward to is the premiums on physical. Thats it. I have no faith that silver will be allowed to go up this year. You may think thats pessimistic, but in the long run, I know that it will make up for years like last year and possibly this year.

silverwood
Jan 11, 2013 - 12:53pm

I don't get this

A source of mine (not AM) just told me that one of his "sources on the floor" informed him that the reason for the selloff in the metals is a rumor that the SwissNationalBank is heavily underwater in yen and is being forced to sell gold to raise margin cash.

So I am the Swiss National Bank and I am under water in a Yen position, OK why would I sell gold to cover my margin call when I could create Swiss Francs to either buy or sell what I need? I don't get it?

Missiondweller TF
Jan 11, 2013 - 12:54pm

@Turd Re: SNB

But as usual, why on earth would any trader sell enough gold to move the market? What about best execution and getting the best price? I doesn't make any sense to me.

Even if it was gold selling to meet a margin requirement the trader still has all trading day to put in sell orders. This just looks like a typical gold attack.

silver66
Jan 11, 2013 - 1:07pm
porkydawky
Jan 11, 2013 - 1:07pm

OMFIF Report Advocates Gold Remonetization

In a report published today, the Official Monetary and Financial Institutions Forum (OMFIF), a global organization of central banks and sovereign wealth funds, recommends that gold be remonetized for use as international money, alongside major currencies. OMFIF gives a number of reasons for this but they boil down it to gold's historical role in establishing and maintaining confidence and stability in international monetary relations. Such confidence and stability have dramatically declined as a result of the global financial crisis that began in 2008, to the detriment of the global economy. Falling back on the solid foundation of gold is the best available way to eventually move forward with healthy and sustainable growth in global trade, to all countries' mutual benefit, and to bring an end to the escalating 'currency wars' that increasingly threaten the global economy.

The link to the report, Gold, the Renminbi and the Multi-Currency Reserve System, can be found

https://www.omfif.org/downloads/Gold,therenminbiandthemulti-currencyrese...

Taken from Peak Prosperity site..

RE the SNB rumour. It is complete Bull as the Swiss do not sell their gold at a loss. More MOPE & SPIN to cover the dumping of contracts so that the HFT's do not switch over to buy mode after another day above the 200DMA.

Be frank. The feckers can do what the hell they like until the system gets screwed.

Japan seems to be itching for war, guess in a crisis they can use it as cover to reset their system, and avoid politicos taking the blame for any collapse. Domino affect then ensues... (pizzas all round????!!)

porkydawky
Jan 11, 2013 - 1:09pm

Red Alert: Obama Plans Executive Actions to Eventually Fully Dis

https://theintelhub.com/2013/01/10/red-alert-obama-plans-executive-actio...

In a move seen by many as a step toward fully disarming the American people, Vice President Joe Biden has publicly announced that President Obama is considering broad executive action to limit the 2nd Amendment rights of American citizens nationwide.

Dyna mo hum silverwood
Jan 11, 2013 - 1:19pm

Silverwood you said....

So I am the Swiss National Bank and I am under water in a Yen position, OK why would I sell gold to cover my margin call when I could create Swiss Francs to either buy or sell what I need? I don't get it? I would not rule out the possibility that said bank is broke flatter than piss on a board fence. That's just me now.

ivars
Jan 11, 2013 - 1:23pm

This bloody fork for silver

This bloody fork for silver on daily I posted this morning copying fast mover's approach to gold worked like a clock:

The whole USD tanking stuff did not help any.

Now the only thing that is stopping it seems to be the longer term silver uptrend, so the bloody fork may paint itself in the corner by January 21st. Hope it does it earlier.

Anyhow, there is a possibility now that fork has proved itself that silver tries to go to the median of the fork on Monday which would be around 29,1. As it did previous time during the day, while ending the day higher. Opposed by long term uptrend I have added. But it may shoot through.

So be aware. This one really works. Silver still in bear mode since Nov 27.

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