What if this isn't silvers time

[malachii]

I may be just blind - but I cant find any evidence in either article that the silver market was being flooded by central banks in the 80s or 90s. Can you hightlight where for me?

malachii

I'm not much of a conspiracy theorist but government stockpiles of silver have been run down and created an imbalance in supply and demand through out the bear market. Recent growth in investment demand has just highlighted the problem.

Agreed - but "flooding" of a market takes conscious effort not just a running down. It's also a bit hazy because the Russians, Chinese and Indians have never indicated if they are buying or selling into the market and how much they have held (until very recently).

malachii

 

[Yippe-Ki-Ya]

Physical gold and silver should not be purchased through debt and cannot be flipped like paper derivatives, hence it is not and can never be a ponzi scheme that the banksters can pump and dump to wipe you out.

The housing market is fuelled by debt finance and the willingness of bankers to loan ever increasing amounts of money into existence for speculation on rising prices. That just doesn't happen in the physical precious metals market. People only convert what savings they have available and can afford into physical metal and it is usually put away for their future well being.

Think of physical precious metals as islands of safety in an ocean of irredeemable fiat currency. They may both be considered money, but in the ocean you have to swim like hell to keep your head above water while the bankers and politicians are creating bigger and bigger waves, while on the islands of gold and silver you can relax, enjoy the view and perhaps help get a few people to shore.

It is only gold and silver that has a history of being both a long-term store of value and a unit of exchange and every single person on the planet intuitively knows their role and that they are independent of banksters or corrupt, thieving, traitorous (or pragmatic) politicians. When the faith and trust in the system, epitomised by the bankers, politicians and their cronies is lost, then people turn to the precious metals for wealth protection and safety for the future of their families.

So for PMs to significantly decline in value relative to fiat currencies in a sustainable manner, it will require the restoration of faith and trust in our political and economic institutions.

And quite frankly, the prospect of that occurring is diminishing daily with every utterance of a politician, every change in interest rates, every expansion of the welfare system, every new tax, every half-baked idiotic idea for socially engineering and controlling our behaviour, every speed camera, every naked body scanner (next year), every insane unending war, every assurance that genetically modified food is fine, every behaviour altering chemical added to the water, every effort to enforce a carbon tax while selling coal for profit, every failed climate conference, every new piece of legislation compounding the centuries of existing legal constraints, every life lost to economic stimulus initiatives, every leaking nuclear reactor, every additional dollar printed by the central bank that waters down the savings of the people and with every dollar rise in the price of gold and silver.

+ 1000

 

[Yippe-Ki-Ya]

Any evidence or is this just a theory?

malachii

My apologies - i thought that the flooding of silver markets by the central banks was common knowledge...

In any event, the testimony by Andrew Maguire provided more than sufficient proof of the manipulation of the market by JPM.
More than enough info is out there for anybody who wishes to do his own research...

Here are 2 out of the literally thousands of such links.

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

http://spktruth2power.wordpress.com...-exposes-systemic-fraud-by-cftc-and-jpmorgan/

I may be just blind - but I cant find any evidence in either article that the silver market was being flooded by central banks in the 80s or 90s. Can you hightlight where for me?

malachii

Yes you are correct - the links i supplied were soley on the topic of silver manipulation by JPM.
Did you want links regarding the role of Central Banks in depressing the silver price as well?

 

[jnkmbx]

I'd go as far as to say that true savers/workers and debt free PM investors are actually the minority population on SS, judging by recent discussions here.

hmmm, my initial impression was that stackers here put some irregular income into PMs rather than borrow for PMs :/

I thought maybe most stackers would share a similar view on debt.
i.e. That debt should be avoided and it is best to be productive to generate income instead

Then again, I'm pretty hardcore in my beliefs.
I've never been in debt in my entire life. I always pay upfront. I don't even use my credit card unless I have "pre-paid" it with the amount I'm about to spend from it.
It's the reason I've never "bought" a house. It's either pay in cash or nothing.

People have been telling me I should just swallow my pride and put down the deposit, but there's no way I'd do it in this climate anyway.
I'd rather use the monthly interest to buy some PMs

 

[CriticalSilver]

Physical gold and silver should not be purchased through debt and cannot be flipped like paper derivatives, hence it is not and can never be a ponzi scheme that the banksters can pump and dump to wipe you out.

To be a fly in the ointment on that comment Gino, where do you think half the people on this very forum who have thousands thrown into Gold and Silver sourced the cash to buy it in the first place?

I assure you, many here got it through maxing credit cards or taking loans.
Many more borrowed until their anus bled to buy investment property and cashed in the gains to sink it into metal, or still have that property and have tapped the equity to buy metal.

Oh I know they'll say they worked hard to get down the deposit to buy those leveraged investments and rode the CG train to riches, but I assure you, unless you're a long term stacker or you're in a very well paid job, not as many stackers here as you might think actually only source through money earned & no debt.

I agree it's very dangerous to leverage investment 100% reliant on capital gains and no offset for holding costs, but to assume that many SS investors are not leveraged either directly or indirectly to source their stack would be naive I believe.

Spike up any discussion of pro-saver vs pro-debtor and you'll quickly pull out those in the woodwork who carry debt for PM investment and speak proudly of it.

I'd go as far as to say that true savers/workers and debt free PM investors are actually the minority population on SS, judging by recent discussions here.

If that is so, then they are really speculators, hoping to ride an asset bubble and do not appreciate the paradigm shift away from debt based instruments that is fuelling the collapse of those "asset classes" (or conversely the nominal rise in precious metals).

Speculating is for traders and asset appreciation with liquidity are the objectives, holding physical is for savers and ownership with growing or sustained long-term purchasing power is the objective. Nothing wrong with either, but it is best to be clear what you are doing. IMO, leverage is for speculating and saving is . . . self explanatory.

As long as one is in a position to extinguish their debt then they are in a strong position. However, it is a bit hard to do if holding physical metal when your creditor comes calling. I mean, that is why there are ETFs and futures markets, so speculators can participate in the asset class while remaining liquid.

Holding physical PMs though require strong hands (financial strength/no debt) to ride out volatility otherwise you may lose your stash to the third parties one is dependent upon to finance your holding.

Each to their own. For me though, I need things really simple like:

Debt = BAD; Savings = GOOD; and always the Golden Rule (http://en.wikipedia.org/wiki/The_Golden_Rule)

That covers off just about everything I reckon.

 

[malachii]

Yes you are correct - the links i supplied were soley on the topic of silver manipulation by JPM.
Did you want links regarding the role of Central Banks in depressing the silver price as well?

Yes please - I know that this is a common assumption amongst some but I cant find any real evidence (other than vague unsubstantiated claims in dark corners of the internet) of organised flooding of the market to suppress the price during the 80s and 90s.

As I said in an early post - the articles really don't point to long term market suppression of price with JPM either - just well organised short term manipulation of the price below a current at-the-market option to make a short term gain. I may be misreading but to me it seems to show they dont care if gold/silver go to the moon or crash to the grounde - just as long as they can keep it down a bit for a week or so before option expiry every 3 months.

malachii

 

[Skyblues]

I'd go as far as to say that true savers/workers and debt free PM investors are actually the minority population on SS, judging by recent discussions here.

goldpelican and others who have been here since 2009 would be a better judge of this but my impression of SS is the opposite. There are quite many hard-earned-buck-into-PMs type of people here...And many stackers with already existing debts/mortgages and family responsibilities who cannot breathe silver as easily as Gen Y. So I believe most of the people here have inflexible budgets, with varying degrees of course.

I think that generalisation is quite off. Being a leverage player has always been the medium of a minority, not the other way around.

 

[Guest]

I implore you to browse the Real Estate forum here on SS.

It's an eye opener.

 

[malachii]

Just because someone owns real estate doesn't mean they are in debt!

malachii

 

[hem9]

Just because someone owns real estate doesn't mean they are in debt!

malachii

so true. hard to generalise that everyone who owns real estate has debt

 

[Yippe-Ki-Ya]

As long as one is in a position to extinguish their debt then they are in a strong position. However, it is a bit hard to do if holding physical metal when your creditor comes calling. I mean, that is why there are ETFs and futures markets, so speculators can participate in the asset class while remaining liquid.

Why would you say that???
I've found physical to be excedingly liquid! While it may take a couple of days to sell on SS if i was REALLY in need of cash within 24 hours i could sell bullion to my local bullion dealer and the cash will be in my account by tomorrow...

So i dont think your point above is valid.

 

[Guest]

Just because someone owns real estate doesn't mean they are in debt!

malachii

Fair point malachii.

But to be fair, it was pretty obvious I wasn't addressing such investors in my statement - just the leveraged ones.

It's pointless to get a show of hands on who honestly owns outright and who's in debt to their eyeballs, but I'm going to go out on a limb and say the latter category here seems to be more prevalent than the former based on commentary on those threads thus far.

People with their life savings (and a lot of borrowed cash) parked in the great Australian property ponzi have everything to lose and can be fairly touchy about talk downplaying their investment vehicle I find...

 

[Yippe-Ki-Ya]

Yes you are correct - the links i supplied were soley on the topic of silver manipulation by JPM.
Did you want links regarding the role of Central Banks in depressing the silver price as well?

Yes please - I know that this is a common assumption amongst some but I cant find any real evidence (other than vague unsubstantiated claims in dark corners of the internet) of organised flooding of the market to suppress the price during the 80s and 90s.

As I said in an early post - the articles really don't point to long term market suppression of price with JPM either - just well organised short term manipulation of the price below a current at-the-market option to make a short term gain. I may be misreading but to me it seems to show they dont care if gold/silver go to the moon or crash to the grounde - just as long as they can keep it down a bit for a week or so before option expiry every 3 months.

malachii

Extract from Mike Maloney's Investing in Gold and Silver

Governments around the world have stopped using silver as coinage and have been selling off their stockpiles. Look at Chart 26 (below).

In fact, since the 1960s, a time when every government on the planet had significant silver reserves
and used silver as coinage, and a time when the U.S. controlled 3.5 billion ounces (the single largest silver
stockpile in history), all governments have been selling off their silver inventories. This extra supply has
had the effect of artificially depressing the price. Today governments around the world are effectively out
of silver. These government fire sales were accompanied by investor sales of around 1.6 billion ounces
from 1990 to 2005. This had the effect of artificially depressing silver's price to such low levels that in
many cases the price was below mining costs, putting some primary silver producers out of business.

 

[bellinvest]

Silver will drop just like it did post GFC in 2008, but this drop will be short lived!
The price could halve momentarily, but! silver could be at $100 by then so falling back to $50 for a short time...maybe.

Then as people wake up to their devaluing dollar, real inflation and world events they will pile into the market that we understand best. From then on the sky is the limit! The AUD will also come down in time which is great for us Aussie investors. Thats a just a little bonus on the side i guess.

There is not much good news comming out of the US or Europe at this moment which is bullish for Silver/Gold.

This bull will keep on bucking!

 

[Guest]

Bucking bulls... honestly!

 

[silverfunk]

Auspm I think even those that are in debt to there eyeballs would have a good enough exit strategy or would be able to liquidate assets easy if shtf.

Everyones situation is different on here.

 

[CriticalSilver]

As long as one is in a position to extinguish their debt then they are in a strong position. However, it is a bit hard to do if holding physical metal when your creditor comes calling. I mean, that is why there are ETFs and futures markets, so speculators can participate in the asset class while remaining liquid.

Why would you say that???
I've found physical to be excedingly liquid! While it may take a couple of days to sell on SS if i was REALLY in need of cash within 24 hours i could sell bullion to my local bullion dealer and the cash will be in my account by tomorrow...

So i dont think your point above is valid.

Fair enough. So far I've been accumulating not trading. Good point too. One needs to know how to both buy and sell. I might turn over a little just to see how that goes. Thanks for pushing that thought along.

 

[Jislizard]

I am leveraged to the eyeballs on the investment properties, even the house I bought outright with cash is now leveraged to pay for the others.

Precious Metals though I only use money in the bank.

The houses were bought as an investment, the silver was bough to protect my cash from disapearing through inflation and bank crashes.

The principles should be the same though, you borrow cheap credit to make your purchase, you sit on it until its value goes up or the Fiat goes down (guaranteed because of inflation). If you sit on it long enough the original amount borrowed becomes negligible.

You then sell enough of it to cover off the original purchase cost (which would now be chump change due to the drop in value of the fiat) and the interest payments. This leaves you with some of your original purchase which is pure profit or you can keep hold of it and watch it make the same gains.

This (has) worked well for properties because in the interim you get rent which covers off the cost of the interest payments, you sell one of your houses when the prices have doubled and it covers its own cost and pays for the second house. Which you now own outright.

Not sure how borrowing to pay for precious metals would be of any benifit unless you expected the prices to increase to such a level that they would cover the cost of the interest and the loss to inflation.

If you are borrowing to pay for metals it is a strong vote for either metals going exponential or the crash of the fiat currency in which you took the loan out, If Australia was hit by hyperinflation and the value dropped it would be easier to pay off the debt I suppose.

 

[malachii]

Yes you are correct - the links i supplied were soley on the topic of silver manipulation by JPM.
Did you want links regarding the role of Central Banks in depressing the silver price as well?

Yes please - I know that this is a common assumption amongst some but I cant find any real evidence (other than vague unsubstantiated claims in dark corners of the internet) of organised flooding of the market to suppress the price during the 80s and 90s.

As I said in an early post - the articles really don't point to long term market suppression of price with JPM either - just well organised short term manipulation of the price below a current at-the-market option to make a short term gain. I may be misreading but to me it seems to show they dont care if gold/silver go to the moon or crash to the grounde - just as long as they can keep it down a bit for a week or so before option expiry every 3 months.

malachii

Extract from Mike Maloney's Investing in Gold and Silver

Governments around the world have stopped using silver as coinage and have been selling off their stockpiles. Look at Chart 26 (below).

http://forums.silverstackers.com/uploads/1184_inventories.jpg


In fact, since the 1960s, a time when every government on the planet had significant silver reserves
and used silver as coinage, and a time when the U.S. controlled 3.5 billion ounces (the single largest silver
stockpile in history), all governments have been selling off their silver inventories. This extra supply has
had the effect of artificially depressing the price. Today governments around the world are effectively out
of silver. These government fire sales were accompanied by investor sales of around 1.6 billion ounces
from 1990 to 2005. This had the effect of artificially depressing silver's price to such low levels that in
many cases the price was below mining costs, putting some primary silver producers out of business.

Sorry - but 1 blurry chart and a paragraph taken out of context from a book doesn't really prove anything. I have no issue with the fact that governments have been selling off their stockpiles. I would too if I had no use for it. The US particularly had to unload as it had been forced to buy silver because of the Silver Purchase Act of 1934 which meant that the Government had to buy all that a silver mine wanted to sell them until Federal Reserves equalled 25% silver. This was repealed some time in the 1960s. There is no way that this was a healthy situation. You could just as easily argue that prices and stockpiles were returning to normal after being artificially inflated by government policy for 30 years.

Chart is too small for my eyes to read but I think it is saying stockpiles (I'm assuming silver but it doesn't say) have reduced I think 350 mil oz to 50 mil oz from 1970 - 2007. This is a drop of just over 8 million oz a year on average. In 1980 the world industrial usage of silver was 362.5 mill oz. never mind the usage for other things. So the Government "firesale" equated to just over 2% of industrial usage. Is this really enough to be a concerted effort to suppress the price of silver worldwide? I'd hardly call it a fire sale. More like a gradual wind down of an asset to prevent a crash due to a massive dumping. Who really knows?

Don't get me wrong - I'm not writing off what MM says or that silver is a good investment. My original post was just trying to point out that silver can and does crash and spike rapidly and also can flat line for decades. Nothing in the past points to this changing in the future. It may spike to $1000 and then crash to $20. Who knows. But rather than following the mantra of "buy now - it can only go up" and blindly buying, holding and praying, maybe take a moment to look at history (not just in silver but all PMs and other assets) and make your decision from there. Believe it or not - it's not different this time just because it is silver.

malachii

 

[JulieW]

good point - can anyone provide historical silver price data for us = last 80-90 years perhaps?