Tag Archives: silver bullion

Here’s The Primary Reason The United States Is Collapsing

I was reading Jim Quinn’s latest piece – This Time Isn’t Different – which I highly recommend by the way, and a quote from John Hussman grabbed my attention:

The answer is straightforward:  as the bubble expanded toward its inevitable collapse, the role of Wall Street was to create a massive supply of new “product” in the form of sketchy mortgage-backed securities, but the demand for that product was the result of the Federal Reserve’s insistence on holding interest rates down after the tech bubble crashed, starving investors of safe Treasury returns, and driving them to seek higher yields elsewhere.

I have a big problem with that assertion because it implies that investors had no choice but to move the money they managed into highly risky investments in order to obtain high yields.  But investors did, do and always have had a choice.   While it may be true that earning a high enough return to satisfy the ignorant greed of the public required taking insane investment risks, the alternative was to heed the true underlying fundamentals and stay in cash or move into physical precious metals bullion.  No one was putting a gun to investors’ heads and forcing them to play Russian roulette with financial landmines.

Several famous hedge fund managers liquidated their funds and returned their investors’ money.  A good friend of mine closed down his investment advisory business because he refused to put his clients’ money into the stock market even though he received calls every day from clients insisting that he buy stocks.

The protagonists in “The Big Short” were portrayed as feeling guilty about making a fortune off the demise of others.  But the “others” who lost were people who made bad decisions.  While Wall Street did its best to bamboozle the public, there are plenty of people who avoided making bad choices because they took the time to educate themselves in order to avoid making what were obviously going to turn out to be bad decisions.

The United States is collapsing politically and economically because the populace has enabled it to fail by choosing to conduct their lives in ignorance.   This video, for me, encapsulates the essence of the problem:

“We Just Can’t Get People To Stop Buying Silver”

I was exchanging emails with “Doc” of SilverDoctors.com and SD Bullion about market conditions today.  I wanted to share what he said about the silver market today:

That said, this market is insane right now.  We’re seeing an easy 8-10 fold increase in order volume and sales.   Premiums have moved big time in the past 24-48 hours…looking like my forecast that we could be looking at 2008 style premiums in the metals could be in the bag if we get any further price weakness below $14…

…things finally went nuts today.  Wholesalers and mints raising prices and extending delays by the hour, and to quote the head of one of the largest precious metals trade desks in the US:  “we just cant get people to stop buying silver!” 

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Silver Price Suppression Intensifies As India Imports A Record Amount

Just three weeks ago the silver open interest was 174, 000. But, get this. The day when the Keith Neumeyer/First Majestic letter surfaced the open interest was 178,343. In just 6 trading days it has risen nearly 14,000 contracts, soaring into one all-time high after another…Is the OI soaring because JPM is letting First Majestic, and the silver investment world, know what they think of that letter? Or is it soaring because THEY are having trouble keeping the price down due to all the buying which is showing up in the futures market?  – Bill “Midas” Murphy,  Lemetropolecafe.com

The open interest in Comex silver futures hit an new all-time high as of the close of Thursday’s trading at 191,663 contracts.  This is 958 million ounces of paper silver – about 19% greater than the world’s annual production of silver.  To say this amount of open interest in silver is “absurd” is an insult to the word “absurd.”

This farcical degree of manipulation exceeds any market abuse I can recall in nearly 30 years of market experience.   The only explanation for the regulators – the CFTC and Justice Department – turning a blind eye to this is that the price suppression of gold and silver is being implemented on behalf of the Government.  This is not an original viewpoint, as the probability of this has been suggested by some well-followed analysts in the past.

The [Commitment of Traders] report indicated that 8 traders in COMEX silver futures held a net short position of 376 million equivalent ounces of silver, by far the most of any commodity in terms of world production (163 days)…It occurs to me that such massive speculation in COMEX silver futures may not be in keeping with the spirit and intent of commodity law and may suggest something is wrong with the price discovery process.  – excerpt from a letter written by Gregory Roberts, Chairman of First Mexico Gold Corp. to the Chairman of the CFTC (underlined emphasis is mine)

As Mr. Roberts asserts, something is wrong with the “price discovery process.”  As James Turk reported on Friday to an email group of which I’m a member, “Trading ended today here in London with July silver $0.06 under spot, and delivery is only 2-1/2 weeks away. Gold was almost as tight going into June delivery, and while the initial pressure has relaxed somewhat, gold remains very tight.”

Spot silver on Friday was 6 cents/oz above the price of a July forward contract for which delivery is required in 2 1/2 weeks.  This “backwardation” means that there’s an immediate shortage of physical silver.  Furthermore, investors would prefer hold on to their physical silver rather than sell at the spot price and buy a July forward which would enable them to replace at a lower the silver they sell.  On an annualized rate basis, the discount works out about 8%.  Backwardation in a commodities futures market is failure of the price discovery process, among other problems.

What this really means is that investors are not willing to take the risk that they might face problems getting their silver delivered and would prefer to hold on to what what they possess in hand rather than make a quick arbitrage profit.  In other words, the market does not trust paper silver.

In the face of the extreme degree of illegal naked short-selling paper silver futures on the Comex, India is on track to import – by a wide margin – a record amount of silver.  Steve St. Angelo of the SRSrocco Report (link to Steve’s article) writes:

If Indian silver demand remains strong for the rest of the year, total imports may reach 9,000 mt (300 Moz) in 2015. Total global silver mine supply was 877 Moz in 2014. Thus, Indian silver imports in 2015 could consume a third of world mine supply compared to 25% the previous year.

Steve will be a guest on the Shadow of Truth this Thursday.

As our latest guest, Jeff Brown, has reported from Beijing, China will be using 3,162 metric tonnes of silver per year just for its solar energy installation plan.  In other words, India and China combined, would be soaking up 50% of the world’s annual silver production in 2015. And China’s number only includes its silver usage for solar energy.   That does not take into account China’s demand for other industrial uses plus investment demand.

Clearly the U.S. Government – via the Comex – is using paper silver to implement an unprecedented price manipulation operation in silver.  Part of the reason for this is because Constitution mandates silver as an official form of currency, along with gold.  If the price of silver were allowed to seek true price discovery, it would completely undermine the legitimacy of the U.S. dollar (Federal Reserve Notes), a fiat currency.  Like all market interventions, this going to end in disaster for this country.

While it’s not worth speculating on the timing for when the manipulation effort ultimately falls apart, Craig Hemke of the TF Metals Report outlines a compelling case for why another short-squeeze in silver is about to occur:   He We Go Again – Another Short Squeeze Looms.

JulySilverInvestors and speculators who understand what is happening right now have an opportunity to make enormous profits by going long silver. Other than the precious metals mining stocks, I have never seen a an asset that is as undervalued as silver right now relative to the underlying intrinsic fundamentals, including and especially the imbalance between the supply and demand for physically deliverable silver bullion.

SoT #33 – Jeff Brown: Unlocking Some Secrets To China’s Silver Demand

The fact that I could not find any statistics on silver bullion imports suggests that silver imports and exports are like gold – a State secret in China.  – Jeff Brown, Shadow of Truth

Jeff Brown of 44days.net – “Reflections in Sinoland – Reporting From the Belly of the New Century Beast” – is our “eyes and ears” on the ground in Beijing.  For us at the Shadow of Truth, he is an invaluable resource for digging up and analyzing what is happening “on the ground” in China.

One of the great mysteries in the precious metals world has to do with information about China’s demand for and use of silver.  We have scoured the western internet for any information about China’s importation of silver and have come up empty-handed.  So we put Jeff to work to see what he could dig up.

Although Jeff could not find any information on silver bullion – refined bars and coins – imports into China – which included an unanswered inquiry into the National Bureau of Statistics – Jeff was able to dig up information on China’s importation of silver ore and concentrates.  Again, this is information for which I have not seen any published reports in the western media.

Based on everything I could find, it looks like China is trying to get its hands on all the silver it can find. – Jeff Brown

We discuss and analyze Jeff’s findings in the second episode of our series on getting a look at what is going on in China from the inside:

China historically – as in, over many centuries – has had an insatiable demand for silver. As trade flourished with China starting in the mid-1500’s, European traders began to drain sovereign silver stocks in order to pay for Chinese commodities.

Eventually the British began to focus on selling opium to the Chinese. The Chinese merchants who purchased the opium from the British were using silver pay for the opium cargo. This served to “reverse” the flow of silver.

As Jeff discusses in the second half of the podcast, the opium for silver numbers are astronomical when measured in today’s scale.

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