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Thread: Bix Weir: Why you should own Silver

   
   
       
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    Advanced Q&A on Gold/Silver Manipulation

    Bix Weir



    The following questions were submitted by subscribers to the Road to Roota Letters. These questions display the vast, in-depth knowledge of gold/silver conspiracy believers as to the workings of Gold and Silver market manipulation. Much of this information can only be fully understood by knowing what is REALLY happening behind the scenes of our manipulated metal markets. For a better understanding review the free Road to Roota Letter Archives:

    http://www.roadtoroota.com/public/department36.cfm

    May the Road you choose be the right Road - Bix Weir

    QUESTIONS:

    1. After following mettlesome silver prices for years which has resulted in the low silver price we have today, why has not one large buyer (there are thousands of billionaire players today) purchased all the remaining silver in one large purchase? (Jerry F.)

    In there lies the mystery! I had the same question about 5 years ago until I discovered the Manhattan Project Silver that I discuss in these articles:

    http://www.roadtoroota.com/public/135.cfm

    http://www.roadtoroota.com/public/151.cfm

    It may be that the 470M oz of silver salvaged from the Manhattan Project has lasted these 15 years or so. If you do the math that is an extra 30M oz per year. Add to that the Buffett silver that the banking cabal deftly stole from him in 2006 reported to be around 120M oz. That's another 30Moz per year since 2006. If you add in all the pooled account silver, leased silver, swapped silver, silver certificates, etc you can see that there was a lot of physical silver available over the past 10 years. I believe we are at the end of that supply.

    A very interesting tool that the banking cabal uses in their physical silver manipulation scheme is redirecting silver investment demand into the iShares Silver ETF. With a current market cap of about $6B and 300M oz of physical silver SUPPOSEDLY in inventory, SLV now holds the largest hoard of known physical silver on earth. Too bad nobody knows if its actually there, if it's real .999 silver, if has multiple claims of ownership, if it's leased out, if there's a million phantom shares, blah, blah, blah. Just the fact that JP Morgan is the "Custodian" should send a cold shiver down your spine. In any event, about $6B has been diverted away from the ownership of REAL PHYSICAL SILVER into the murky coffers of the bank controlled Silver ETF as well as the psychotic Silver Derivative world controlled by the likes of Blythe Masters at JP Morgan.

    One more thing...you must also keep in mind the disinformation campaign that the banking cabal has waged trying to dissuade investors from buying silver with statements like... "it's too volatile", "only gold is a monetary metal", "it's too hard to store", "digital cameras will kill film demand" and on and on. If you are like most silver investors you likely learned about the investment potential of silver only after you took an interest in gold. Don't you find that interesting?

    On a more positive note, there are some excellent investor reports that have come out recently debunking all the silver misinformation and serious investors are beginning to take notice.

    Remember, it won't take many Billionaires to wise up, grab their share of the metal and send silver to the moon. All they need is to clue in..maybe this article will help do it. :-)

    2. If industrial production gets affected globally on a major scale with a possible (not too distant) future calamity, how much do you think the sudden drop in industrial demand for silver will affect the rising prices?(Graham L.)

    ZERO! Less than zero! Make no mistake, the global calamity is just around the corner but silver...real physical silver...will explode upward in price because there is just so little of it available, so much smart money looking for a home and so much information out there about the manipulation that it has no choice. Yes, a global down turn will effect industrial demand but it will be more than compensated for by new investment demand.

    For over 100 years the Bad Guys have tried to "demonetize" silver by removing it from the currency, talking down its investment potential and rigging the market lower with paper silver. Their time is now OVER and soon they will be removed from power.

    I'm not saying they can't rig the silver price lower, much lower, for a short amount of time but it would only shorten the ultimate time frame for silver to take off. The word is out and any price slam will be used by large players as a physical buying opportunity. The true pricing power of silver does not reside in film demand, electronics demand or in military applications. The true power in silver lies in the greatest secret ever...that silver is, and always will be, a MONETARY METAL.

    When the crash happens billions if not trillions of dollars, euros, pounds, yuan and rubles will flow into the silver market and you will kick yourself over and over again for not fully understanding the potential for a silver price moon shot.

    It will happen...the only question left is when.

    3. So many of the folks you have designated as the wearers of white hats (Good Guys) are known to the public at least as Liberals, even ultra Liberals, often associated with the very opposite of liberty. Is this, their Liberal reputation, a matter of hiding in plain sight?(Phil S.)

    I think you are looking at this situation from the wrong angle. Republicans vs Democrats, Liberals vs Conservatives, Left vs Right...it's all a construct of the bad guys to create divisions and loyalties in the people of the USA. They control both parties leaning one way or the other to forward their global agenda.

    We need to start thinking of our leaders as Americans. Who supports the constitution? Who supports individual rights over government power? What do YOU believe in and who reflects your views in government? We have to start thinking differently if we ever want to free ourselves from the clutches of the Bad Guys.

    As for your question and how it relates to our current leaders...it is ALL part of the ultimate plan. There are still many within Washington who are under the control of the Bad Guys but "We The People" still have the ultimate power to end fiat currencies. You may look at Liberals like Pelosi, Feinstein and Frank and think "How could they be Good Guys when they are destroying our country and bankrupting us with stimulus packages, health care programs and new government agencies."

    My answer would be YES! YES they are destroying our country! The way they are running up our national debt will surely ruin our country. Bankruptcy, insolvency and destruction...BUT THAT IS THE PLAN! That was ALWAYS the plan!

    Remember the conclusions of the 1981 Gold Commission Report:

    http://www.goldensextant.com/Resourc...Volume%20I.pdf



    Basically, they decided to make no changes unless "…reasonable price stability and confidence in our currency are not restored in the years ahead..". One would think that after this report's conclusion the US government would reign in spending to maintain "reasonable price stability and confidence in our currency" BUT THEY DID EXACTLY THE OPPOSITE!

    The 1980's ushered in "Reaganomics", "Star Wars Defense Programs", Keynesian Economics and the FED's perpetual lowering of interest rates to solve all problems. As such, spending went through the roof and has continued unabated for 30 years to land us in the mess we find ourselves in today.

    Destroying the fiat currency through abuse of the printing presses was always the plan to get RID of the Banksters and Bad Guys once and for all. Reagan began to kick it into high gear and the current Congress is administering the final blows. DESTROY THE FIAT DOLLAR AND WE WIN!!!

    After the US Dollar is destroyed there will be no choice but to return to our Constitutional Gold and Silver money.

    The people will demand it.

    4. Is the Amero (presumably already privately traded) coming into play?(Michael E.)



    Not a chance in the USA. Of course the bad guys want it and may even prematurely crash the system to try and implement it but it won't take hold in the US. There are rumblings from the conspiracy world that a Gold Backed Amero is what the bad guys want in order to pretend they have corrected the banking problems but it is only a smoke screen. The Banksters are INSOLVENT and will wilt away if not forcibly destroyed.

    You should not underestimate the LONG TERM plans of the USA to run the fiat monetary system for as long as it benefited the US. We are now at the point where it no longer benefits us so we are going to end it. As yourself this: Who wins if the fiat monetary system dies today? ANSWER: Whoever has the most debt! And of course that would be the good ole USA! Don't believe me...

    http://en.wikipedia.org/wiki/List_of..._external_debt

    And that doesn't even count all the "unfunded liabilities" like social security, medicare, medicaid, gov't sponsored pensions, etc.

    Yes, my friends. When the fiat monetary system fails the United States will simply shut it's boarders and run a domestic only economy for a while fueled by our Constitutional Currencies of Gold and Silver. It was always the end game and we've been implementing it for close to 100 years!

    There will be no Amero in the United States.

    5.Who owns Chocolate Mountain? Once Free Gold comes forth, how will it's value in various currencies be revealed? How will ones existing debt be liquidated? (from: Amberrose)

    I wanted to answer this multiple question because I hadn't fully thought some of these answers out. I also thought it interesting since it came from someone by the code name "Amberrose" which is close to the character Glitch's real name in "Tin Man" (http://www.roadtoroota.com/public/305.cfm). Glitch was of course a takeoff on Alan Greenspan so I'll just assume this is Alan Greenspan asking this question :-)

    First of all Maestro, the ownership of the Chocolate Mountain gold reserves that I discuss in Golden Secrets (http://www.roadtoroota.com/public/181.cfm) is a bit of a mystery. I spent a few days tracking it down but left just as confused as I started. I know Feinstein's husband is involved as well as Santa Fe Pacific, Catellus Corporation, Prologis and then leading to CALPER's, AFL-CIO and United Steel Workers.

    In the end I think that the vast riches of Chocolate Mountain will be nationalized along with many other large deposits in the United States. There will be just too much at stake and too many angry people for a small few to own the wealth of our nation.

    As for how our US gold and silver money will be valued in other national currencies...it won't. At least not at first. To understand why you might have to brush up on the Road to Roota Theory and what is said in the Fed comics:

    http://www.roadtoroota.com/public/190.cfm

    In the Road to Roota teachers guide (http://www.bos.frb.org/education/pubs/wishes.htm) some very interesting questions are asked:

    "In what circumstances might the Pebble people consider exporting flowers to Gopher Junction and Boulder's Ridge? Will citizens of those towns have as great a demand for colored flowers as Pebble people have? Do you think that every resident of Pebbleton will own at least one flower before trade with other towns occur?"

    Does that sound like global trading of everything (including currency) stops? It sure does to me...and it makes sense too. Most likely the rest of the world will not be too happy with the USA when we default on all those fiat US Dollars. It is by far the largest holding of foreign central banks and governments. What would you do if you were China? Maybe...confiscate all those US owned factories and start selling to your own population with your own workers buying products with your own currency. Sure sounds like a smart idea to me!

    As for the last question about existing debt I see only two possibilities: #1 is a reworking of current debt somewhere along the lines of the NESARA Act (www.nesara.org). The other, and more probable with what is going on today, is a one time debt jubilee were all debt is forgiven. You will already have lost all your assets when the banks and brokerage houses go down so it would seem like a very fair trade off. It's not like those Banksters EARNED that money they lent you when they put you in debt. They created it out of thin air! I see no reason fiat money should not go out the same way it came in. GOOD RIDDANCE!

    Is that enough Alan? :-)

    6. Do you think there will be a clear point in time when we know or believe that the government might confiscate our Precious Metals? (Doc)

    What do you think would happen to the price of gold if THIS hit every newspaper in the United States:



    I don't see physical metal confiscation happening in the US as everything I follow points to the introduction of a new Gold Standard after the destruction of the fiat Dollar. The Fed and Treasury are practically screaming it from the roof tops in their actions. The latest being the introduction of the new GOLD laden $100 Bills:

    http://www.roadtoroota.com/public/261.cfm

    Also, what would they gain from metal confiscation? There is so little gold or silver held by US citizens that it wouldn't make a dent in the market. Those who hold the little amount of bullion out there are not about to turn in their metal either. Just run the scenario that the USA announces "We are confiscating gold and silver!" in today's globally traded markets. Instantly both gold and silver would skyrocket to hundreds of thousands of dollars per oz. Would you turn your metal in after that? Not me.

    Like the Fed Boston says...be prepared for scenes like these:




    http://www.bos.frb.org/education/pubs/banking2.pdf

    7. What if "Greenspam" (love that name for him as he spammed green paper far and wide...excessively cheap and un-backed paper) isn't the closet hero you think he is...what if he was simply seduced by the dark side? How does that affect your complicated theory?" (John T)

    This is much bigger than just Alan Greenspan. This involves the entire free world with MANY, MANY people and governments preparing to take down the banking cabal together. Currently, we are all being educated like never before on the perils of fiat money and we will all feel the consequences of that easy money very soon.

    You and I are part of this process as well. We are running around telling people of this secret knowledge that just a handful of people knew of just a few decades ago. Walk down the street today and you will find many people who have a basic understanding of our government's out of control spending, the evil bankers and the need to change the direction of our country.

    The best guesses on how many "Bad Guys" there are out there is 10,000 but most of them don't want to be involved anymore. For fear of reprisal or fear of being found out or just wanting to do the right thing...many have seen the writing on the wall and want out.

    It really doesn't matter if Alan Greenspan planned and implemented the reintroduction of the Gold Standard or if it was just a natural consequence of running the fiat monetary system to it's ultimate conclusion.

    The fact is that we have arrived at the end and there is no way to turn this ship around even if everyone wanted to...which we don't!

    8. How will we know when the top price of Silver is hit and what are the signs? At that point, will it be good to sell or swap some or all Silver, for Real Estate and other tangible assets?(what do you recommend at "Games End"?) (Rick D.)

    Silver is a monetary metal so I don't think the "top price" for silver will be measured in fiat dollars. Fiat dollars will be printed until they are no longer accepted. Silver will also be priced in those dollars until they are no longer accepted...so the "top price" of silver will ultimately be infinity! Trust me, when the fiat monetary system collapses you will not want to "sell" your silver for fiat dollars.

    There may be other assets that you would trade your silver for after the crash of fiat money but that is another analysis. At some point Gold and Silver will return to their rightful monetary status yet I think the ratios will be different than ever in history since there is so much gold in the world and so little silver left.

    http://www.roadtoroota.com/public/181.cfm

    I see the Silver to Gold ratio reaching 1-1 at a minimum in the midst of the chaos.

    Now may be the last chance ever to Swap Your Gold For Silver!

    http://www.roadtoroota.com/public/136.cfm

    9) The Financial Reform Bill has been signed into Law and appears to give almost unlimited powers to the cabal to obfuscate and manipulate the system even worse than before. How in heaven's name can this be of any help to the "so called " good guys if they even exist or have not already been bought off? (Ken)

    The new Financial Reform Laws are really only meant to serve one purpose in my book and that is to CLOSE any escape routes for the Banking Cabal. 2008 was the original take down date and the Bad Guys squirmed out of the trap...temporarily. The reality is that NOTHING was fixed and the banks are still insolvent and perched over the abyss again.

    But this time it IS different in that the new Laws will stop any rescue attempts dead in their tracks. "We The People" are also more educated about what is going on and we are ready to say "NO FRICKIN' WAY" when they come begging for another $700 billion dollar bailout.

    My friends over at the CFTC may ultimately be the ones who unleash the guillotine with position limits, investigations and actual ENFORCEMENT of trading rules but my guess is that the cabal will destroy themselves before the CFTC has to act. There are already rumblings around the world of missing gold/silver, fake bars and derivative defaults.

    It's not going to take much to start a run on the gold and silver metal warehouses.

    10. My biggest question is why can't the authorities and laws already in place put a stop to ALL this lawlessness, ex: mortgage fraud, market manipulation etc? (Gracie)

    Truthfully, they can on paper but the Bad Guys are still in places of power such as in court rooms(judges), in Congress, in the White House...in many places of power and influence. Over the years some courageous citizens have tried to take down the Bad Guys but most have failed (good example was Pres. Kennedy).

    It has been over 100 years that the Bad Guys have controlled our lives and the process of removing this power is not easy. There will definitely be disruptions and pain in the process but the end will come. We will be free again very soon. All the pieces are in place now such that there will be no escape for the Banksters this time.

    Most of the new Financial Regulation Laws are directed at a Post-Crash redevelopment of the markets. The Global shake-out will be significant and whether or not there will be any markets that survive is still up in the air. Over time free markets will return...but it may take some time.

    11. You suggest that following the collapse of the fiat monetary system, every citizen will be provided with a sum of "money" that will make it possible for the economy to proceed. Where do you envisage this "money" coming from?(George D)

    I'm going to elaborate a little further on this question because it is an important one. One thing everyone must understand is that the entire banking system is totally and completely bankrupt. The banking industry is leveraged over 15-1 so there is no escape from massive losses when asset values decline. Take for example a typical large bank where 40% of their assets are in residential and commercial real estate. At 15-1 leverage a drop of 20% in the value of real estate will wipe out 120% of the banks capital they leveraged against. How much do you think real estate has dropped in the past couple years...20%...30%...more? Pile on a few TRILLION in derivative losses and you have one heaping pile of crud behind those bank vaults!

    So if all the banks are now technically bankrupt having lost over 100% of their leverage-able capital...where will the "money" used to provide for our daily economic transactions come from? Clearly it's not in the banks...so where is it?

    That's just another dirty little secret. It is just a matter of time before the Sheeple of the world understand that the system is bust and bank runs begin...and end. No banking system can survive a visible bank run so when the panic starts they will all shut their doors. All banks will LOSE EVERYTHING...including the money they hold for you!

    The question then will be "How can we start again?" Clearly, all advanced societies need some form of money to transact business so what will the restart money be and how will it get allocated?

    In my Road to Roota analysis of Alan Greenspan (http://www.roadtoroota.com/public/101.cfm) the answer is two fold. First is that the "new money" should be gold and silver backed and should be fully redeemable at any bank. The second is that in the United States the government should issue the new money according to Social Security payments.

    Back in the early 1970's Greenspan was charged with two missions when he was the head of the CEA under President Ford. The first was to fix the Social Security system and the second was to implement the return to the Gold Standard.

    The following passage comes directly from the Federal Reserve Boston's guidebook "The Road To Roota" pg.4(http://www.bos.frb.org/education/pubs/roota.pdf)




    On the first page of Wishes and Rainbows, the reader is told that, except for the lack of color, Pebbleton is much like any other town. Presumably, therefore, the Pebblepeople have a built-in distribution system for allocation of resources. Just how this system works the reader can only guess. It may be capitalism, socialism, or feudalism (so that the flowers would belong to the nobility). The flowers could all be publicly owned and shared (which seems to have been Roota's original idea when she planted the first flower in the town square).

    They could be auctioned and sold to the highest bidder. Some distribution methods are suggested on page 14 of the comic book, and one can readily imagine many others (lottery, contests, rewards for public service, etc.).

    Why is Pebbleton's traditional distribution structure abandoned in the case of the colored flowers? The unusual nature of the new resource, along with the overwhelming disproportion between supply and demand, create a politically sensitive situation. The mayor, who is at first perfectly willing to take one of the flowers for himself, realizes from the clamor for flowers that whatever distribution method is chosen is likely to dissatisfy certain elements of society. Even if he declares public ownership and sharing, he may be accused of asserting too much governmental control. The demand of the color-starved Pebblepeople for the flowers seems both urgent and insatiable. The mayor therefore assigns Roota the unenviable task of deciding upon a method of distribution that will satisfy everyone.

    Roota's distribution system is ingenious. By using an allocation system that is based on seniority, Roota establishes goodwill with an important segment of society. Meanwhile, those who must wait to receive flowers are comforted by the knowledge that their turn will come. Finally, Roota's decision satisfies her personal desire to add color to her grandmother's life. After all, her grandmother, who first told her of Colorland and who "dreamed of seeing . . . a flower's softly tinted petals," will be one of the earliest recipients of a flower.

    Add to this the first two questions on page 6:

    1. What distribution system does Roota choose, and why? Is this a fair system? What other possible systems might she have chosen?

    2. Will the Pebblepeople accept Roota's distribution system? What might happen if they don't? Should those who have been given flowers be allowed to sell them? How should the price be set?

    Can you see how important and complicated the question of allocation is and how unsure the Good Guys are about the citizens accepting any government mandated distribution method?

    As to the specific question posed by George D. above. "Where do you envisage this "money" coming from?" I believe it will come from all the hidden gold mines and hidden stashes of Gold in the United States. Anyone who still believes there is only 160,000 tons of Gold in the world needs to do a little more homework and stop listening to the like of Jeffery Christian of the CPM Group! This is where all the secret gold in America comes into play...

    http://www.roadtoroota.com/public/181.cfm

    12. What happens to a person's mortgage obligation when the dollar is devalued by being tied to gold?(June C.)(B)

    First of all I do not think the dollar will be devalued because it is tied to gold. I believe we will go back to our Constitutional Dollar when the fiat dollar implodes. These are two totally separate currencies and as all fiat dollars will be wiped clean from the banking/derivative implosion...the only "US Dollars" will be backed by gold and silver.

    As for contractual obligations denominated with dollars...in there lies the problem. Since the banks will all be dead and gone with Governments left to mop up the pieces I think that a one time Debt Jubilee is very much on the table. Lord knows there will be enough anger towards the debt based monetary system to gain public support.

    Of course there are other options such as the NESARA Act where all fiat money is revalued to remove the compound interest factor already paid in. People who have taken loans to buy houses and have made payments into the system for a long time will have their debt wiped clean. They will own their house outright. Others will have their principle lowered by the amount of interest they have paid over the life of their loan. You can read about the NESARA Act here:

    www.nesara.org

    Things will be an absolute mess for a while anyway you slice it so buckle up!

    13. The dollar amount of the silver short position is relatively peanuts compared to the banking cabal and their allies. If silver went up $10, that would be a hit of something like $4-5 billion, nothing really if you have access to a printing press. Why wouldn't they keep doing this for years, when the tax payers would be on the hook in the end, anyway, as they are banks? (Bob F.)

    There are a few issues we have to understand when looking at how the silver short position can be destructive:

    1) The current price of silver is not 50% undervalued or even 100% undervalued but many, many multiples. For over 100 years the banking cabal has been at war with silver as silver is the fiat money destroyer. At a minimum, silver should be valued 1-1 with gold based on supply demand and available metal.

    2) The COMEX short represents only a small fraction of the Banksters overall silver position with many layers of complexity which include derivatives, leasing, swaps, fake bars, fraudulent ETF's, and on and on.

    3) It is clear that the good guys are trying to end the fiat monetary system and a silver rocket will be the most likely way to do that. With $600 silver this year we're talking about hits in the $100's of Billions just on the COMEX shorts. With very low bank capitalization levels it would wipe out the big banksters as well as the entire fiat monetary system.

    4) At some point the physical supply will be gone so no matter how much paper they sell you won't be able to get physical silver. For a while we may see tumbling silver prices due to paper sales but NO physical at any price.

    Silver is the dirty little secret the Bad Guys have held for years. They know it has the power to destroy their empire and the Good Guys know that silver has the power to RESTORE our Liberty.

    These answers are based on my interpretation of current events in the manipulation of gold and silver. YOU should learn everything you can about the issues and develop your OWN conclusions. It's the only way to free ourselves from the grip of the Bad Guys.

    I want to thank everyone for submitting questions for this article. I am sorry if your question wasn't addressed but hopefully the answers can be found in the Road to Roota Letter Archives. (http://www.roadtoroota.com/public/department36.cfm)

    I'd also like to encourage everyone to sign up for the FREE Public Updates at www.RoadtoRoota.com

    May the Road you choose be the Right Road.

    Bix Weir
    py

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    Here's a real simple analysis when it comes to the Silver vs. Gold Investment choice...

    1) Throughout history the silver to gold ratio has averaged approximately 15-1.

    2) The silver to gold mining ratio has averaged approximately 10-1.

    3) In 1971 when the US stopped backing the US Dollar with gold the ratio was 20-1.

    4) After the ratio skyrocket in the 70's it returned in 1980 to 20-1.

    5) The current Silver to Gold ratio is 44-1.

    History shows that either Gold is massively overvalued or Silver is massively UNDERVALUED,

    *Let's not even mention that almost all the Silver mined in the past few centuries is GONE due to electronics consumption and almost all the Gold ever mined is STILL around.

    How about this one...

    The current price of gold is $1835 or 220% of it's ALL TIME HIGH!

    The current price of silver is $41.50 or 83% of it's ALL TIME HIGH!

    This is not rocket science my friends. Is there really even a choice here?

    Melt the Witch
    http://www.roadtoroota.com/public/136.cfm

    History is on your side...Buy physical silver by the TRUNK LOAD!

    Bix Weir
    www.RoadtoRoota.com
    py

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    The silver market whispers are popping today!

    Identities of JP Morgan Silver Manipulators Exposed!

    Word on the street is that CFTC charges of silver market manipulation will FINALLY be announced...when this happens is another mystery altogether!

    But the real exciting info here is that there are MORE WHISTLE BLOWERS exposing the JPM Silver Market Riggers.



    Interestingly, this is a very early hit on my TIME LINE article where I had slated for Fall 2011...

    "The new Whistle Blower law will turn once loyal Banksters into singing canaries to both save their own skins and get rich in the process."


    I have many more TIME LINE hits that will be included in this week's Friday Road Trip (delayed a bit due to all the action). For those interested in accessing the TIME LINE article as well as nearly 700 other Road to Roota articles (yep 700!) please support us by joining the Private Road here:

    http://www.roadtoroota.com/public/10.cfm

    We are in the midst of a serious financial vortex. Every day - of every week - for the as long as it takes - financial surprises will arise until the spine of the banking cabal is broken.




    The time is NOW my friends...prepare accordingly!

    Bix Weir
    www.RoadtoRoota.com
    py

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    INTERVIEW: You Must Own Physical To Survive The Crash
    Bix Weir

    Sept 24, 2011

    I sat down with Sean of SGTreport a few days before the latest gold/silver slam to discuss how to protect yourself from what is about to hit. Here it is:



    py

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    Massive Silver Correction Makes Silver Incredibly Cheap


    by TRACE MAYER, J.D. on SEPTEMBER 23, 2011 · 0 COMMENTS



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    Reading time: 4 – 7 minutes

    Lately, my crystal has been clouded.

    The European turmoil is roiling global markets as counterparties increasingly distrust each other’s collateral leading to the liquidation of pretty much everything. The mantra must be, “If there is a bid then hit it.” This daily noise has opened up some tremendous buying opportunities. Chief among those opportunities is silver.THE 200 DAY MOVING AVERAGE
    On 19 Sep 2011 I wrote about gold and silver consolidating, “The real value seems to be in palladium which is trading at an extreme discount of 0.9224x its 200 day moving average.” This was because statistically speaking palladium was extremely outside the standard deviations of its usual trading ranges relative to its 200 day moving average. The 200 day moving averages acts like gravity to filter out the daily machinations of the market.

    In a secular bull market, like the precious metals are currently in, when silver moves below 0.95x the 200 day moving average then a buying opportunity presents itself where the probability of a gain on the position relative to thenumeraire is much more likely. On 23 Sep 2011 the price of silver is $30.45 and the 200 day moving average is $35.76 which yields a relative price between the two of 0.8516x.


    THE LEHMAN BROTHERS COLLAPSE

    This ratio has never been lower in the past decade except shortly after Lehman brothers collapsed. Within a year the price had doubled. Within three years the price had gone up five-fold. The current correction and ensuing consolidation is setting the stage for a triple digit FRN$ silver price.



    THE PROPER NUMERAIRE

    But the savvy investor may ask, “But is not gold the proper numeraire?” Yes. Sure, this chart is showing silver through the FRN$ lens. The gold to silver ratio, currently around 48 ounces of silver per ounce of gold, does tell a different story. Silver is not nearly as cheap today as it was in the early part of the decade when the ratio was over 100. But as this secular bull market progresses the ratio should continue declining.

    It will likely reach 16:1 and may even overshoot to 8:1 or as some rather bombastic commentators have made the case it may even go to parity, 1:1, or it may actually take more than one ounce of gold to purchase one ounce of silver. While it may seem unbelievable and in my opinion a low probability I do not think it is a completely unrealistic scenario.
    Currently it takes less than one ounce of gold to buy one ounce of platinum. Platinum is much scarcer than gold, there is less platinum produced per year.

    Since the Lehman Brothers collapse the gold to silver ratio has moved from about 80 to 40-45. While gold is the better numeraire; silver has been the superior speculative currency. Remember, you make money when you buy not when you sell.

    GOLD PRICE SUPPRESSION SCHEME

    Six years ago South African gold market analyst Peter George said at GATA’s Gold Rush 21 conference in Dawson City, ”In the last 10 years the central banks have effectively shown that when there’s a real crisis, gold actually goes down, and it’s so blatant, it’s a joke.” The central bank script has not changed.

    But we do know that price controls lead to shortages. Last time silver got this cheap there was silver backwardation for weeks while the price clawed higher to clear the market.

    Remember, you make money when you buy not when you sell.

    CONCLUSIONFollowing provident living principles I like to accumulate the precious metals on a regular basis usually in proportion to excess free cash flow. Like Rick Rule I am a fear investor regarding them and rarely do I move into them based on the greedy speculative component. There are other less manipulated assets for that purpose.

    But in this case the markets have been in major liquidation mode and silver has not been spared. This has opened up a tremendous buying opportunity. But due to the large amounts of manipulation in these markets I would caution against the use of leverage. This is just the latest step in a long staircase of The Great Credit Contraction.



    DISCLOSURES: Long physical gold, silver and platinum with no interest in DOW, S&P 500, the problematic SLV ETF, gold ETF or the platinum ETFs.

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