Reason # 2 The Silver Noose is Tightening

September 5, 2014  •   Economy, Manipulation, Silver & Gold  •   15 comments

Humanity has been Tricked

Today’s dollars are not money.  They are either cotton and linen rectangles that you’re carrying around in your wallet, or digits on a computer screen in your checking account. Both of those forms are merely representations of a widely-owned unit of debt called the U.S. dollar.  They are not money, but anti-money, since, rather than being sovereign, allodial assets in and of themselves, they’re simply present claims upon future goods, which haven’t been produced yet.  They are currency, and not money.  For a detailed explanation of this crucial difference, see Mike Maloney’s superb series on the subject, starting here.

The value of U.S. dollars are suspended in mid-air, so long as other nations continue to demand even more units of this debt issued by the U.S. Treasury. However, there is more debt and interest in existence than there are dollars in which to pay off that debt and interest.  Fiat dollars are a belief, predicated upon the assumption that those who issue them will remain “in business”. Today’s dollars are only effectual to purchase or transact with, so long as those who hold them keep the “religion” of U.S. civic nationalism aflame in their hearts.  After all, they’re only as accepted as the “full faith and credit” of the government issuing them.  Right?  It is mere belief that suspends them.  It rightly follows then, that this unreasonable belief has required humanity to suspend its collective, reasonable disbelief.

Let me ask a question to those in the U.S.: How much faith do you put in these clowns?

Exactly.

Now, ask yourself this: if I, as a U.S. citizen, have that little confidence in these guys, how much worse must the rest of the world’s confidence in them be?  Remember, it is the rest of the world who has loaned the U.S. government enough money to continue this con as long as they have.  Do you think those nations are confident that D.C. will make good on those loans?

The truth is that there are a great many U.S. dollar apostates in our time, aren’t there? There are far too many “dollar disbelievers”(of which I am proudly one), to make this system viable any longer. There’s another problem though, that’s even worse than the one we described: the government isn’t even really in charge of its own currency.  The Federal Reserve issues today’s dollars, and the Federal Reserve is as “federal” as Federal Express. It is a private bank, owned by private interests, which was given sole “authority” to print up the U.S.’s currency, a century ago.  We are told that the Federal Reserve exists to help keep both the job market and the currency stable, but the real reason it was created was to empower rich oligarchs, and transfer vast sums of wealth to them from the poor and middle classes.

Silver Trumps Paper 

The banking and economic system the world currently has is insolvent.  As if that wasn’t bad enough, everything from bank bailouts, to endless Quantitative Easing, to the threats of bank “bail-ins”, to numerous wars, to endless entitlement programs have all hollowed out fiat currencies, and the confidence needed to sustain them.

This is why humanity is returning to its long-lost silver roots: fiat currencies, both of the United States, and the world governments at large, have been compromised.  They have long ceased to be a reliable stores of wealth, or an asset unto themselves.  Fiat currencies are simply paper scrip, denoting the debt of a system of large, private banks.  Whereas, silver has been money for thousands of years.

Everywhere you look, the trend is the same: people are awakening to the state of the world’s financial health, and are swapping their currencies for silver and gold.  This goes counter to the interests and desires of these banks, who wish to keep their privilege of being the sole creators of these units of debt that people mistake for “money”.  Silver is a direct threat to their debt/currency system, which is why they rig its price on a constant, perennial basis.  The problem is that their market rigging has created a world in which silver is just too cheap.  Way too cheap.

How Cheap is Silver?

After all, for thousands of years, a tenth of an ounce of silver, was the average pay for a full day’s labor.  One tenth of an ounce!  The average day’s pay today in the U.S., for a full day’s work, is roughly $100.  Yet, silver’s price languishes at just under $20 per ounce.

Let’s do a few “napkin calculations” here:

1/10 * $20= $2

Could you live on $2 a day, with any meaningful quality of life?  While it’s true that much of the 3rd world lives on $2 a day, let’s be honest here: that’s not living, that’s surviving, plain and simple. You might survive on $2 a day, but you couldn’t live on it. In order for silver to reach the historical valuations it enjoyed for many centuries, that tenth of an ounce of silver would have to reach roughly $100 again.

$100\2=50

This means that silver, on a historical basis, is roughly 50 times cheaper than it should be. Imagine going to work on payday to pick up your wages, and being handed this:

That would’ve been a 2 week paystub for most of the people who ever lived.  Yet today, you could barely get by on one of these per day, much less one every two weeks!   The state of the world’s economy, coupled with a growing awareness of silver’s undervaluation, has led to a surge of silver bullion buying for the past decade.  This has especially been true since 2008.

Stacking to the Sky

Prices don’t reflect it right now, but demand for silver is the highest it has been in many decades. Don’t take my word for it though, take a look for yourself at this excellent chart by SRSRocco:

Unbelievable, isn’t it?  In just 7 years, worldwide demand for physical silver coins and bars has gone from 50 million ounces, to nearly 250 million ounces!  A full 5-fold increase! 

In fact, last year, so much silver was demanded by the world, that there was a shortfall of over 100 million ounces.  Much of that demand, by the way, was in large part, thanks to parts East. Beginning to see a trend here?  The East is leading the way in so many areas, now.

India, especially, is leading this silver charge, as their demand for silver jewelry and bullion hit all-time highs in 2013.  The “Mr. and Mrs. Prajapati’s” of the world stockpiled roughly 6,000 tonnes.  Meaning that nearly 1 in every 4 ounces of silver produced last year, ended up either safely tucked away in the homes of Indian farmers, or adorning some bedazzling Indian bride.

“Well, sure, Watchman, India may have demanded that much silver last year, but that must’ve been an outlier.  Surely that’s not sustainable, right?”

I’m glad you asked that!  Take a looksie at a snapshot of Indian silver demand in the first half of 2014!

As you can see, once again India is sucking up nearly a quarter of all silver mined on planet earth this year.  Part of this is due to the silly taxes placed upon gold and silver, in the form of import tariffs.  A 10% tariff placed upon gold, which Indians are having to pay right now, raises the price by over $100 per ounce, but a 10% tariff on silver raises the price by a mere $2.  This is making silver much more attractive than gold, on a value basis right now.

Chinese Demand

It’s not simply India who can’t get enough silver, though.  The Chinese, whose government lifted the ban on silver purchases just several years ago, are also eager to drain the stockpiles available to them.  In fact, silver stocks at the Shanghai Futures Exchange are perhaps the only thing currently falling faster than Congress’s approval rating.

Over the past year, that exchange has hemorrhaged over 90% of its silver bullion, and counting. What happens when if or when those stockpiles run dry?  Will China’s largest silver bourse simply close up shop?

Will a sign be placed outside saying: “No Silver Available”?

You see, the problem with a shortage in anything, is that it tends to create its own demand.  Human beings are funny creatures, sometimes. We seem to want things the most intensely when we can’t have them, don’t we?

So let me ask you again: what do you think will occur when the 2.5 billion people in China and India discover that they can’t get the silver they thought they could at sub-$20 prices?

What happens when the tiny trickle of people(who is already buying more silver than is even being produced) becomes a groundswell?  A raging river?  A veritable tsunami of silver buying?

What were to happen, if just 1% of the world’s money tried to get into silver(roughly 100 times more than now)?

The only reason these Western banks can continue this price suppression is that the world doesn’t yet realize that silver is so undervalued, because they think there’s plenty of it available.  Not one person in 100,000 realizes that silver is slowly going into a dire shortage.  They all believe it’s plentiful.

What happens when that’s no longer the perception?

Conclusion

Recently, arch-criminal and Goldman Sachs CEO(sorry to be redundant), Lloyd Blankfein told an interviewer that he had alot of bad dreams that keep him up at night, and that liquidity was one of them.  He went on to say, that he believed an event was coming which would cause the average investor to reset their portfolios.  

He knows.  All of Wall Street knows what’s coming.

I submit to you though, that the most terrifying nightmare which plagues this foul man’s mind(as well as other top Wall Street bankers), is one he won’t talk about.  One which even the upper echelons of banking never refer to above a whisper.  They know the walls have ears.  They dare not talk about it, because they can’t.  One slip up could end the game.

Yes, I’d be willing to wager, that the thought of a worldwide silver-buying panic, a rush into physical silver is The “Capital N” Nightmare at the top of their list.  Theirs is a Silver Nightmare.  One which cannot and must not be named. Too bad for them, because it’s coming for them, like the Four Horsemen.

To paraphrase good ole Mammy, on Gone with the Wind:

“Dat silver shortage is comin’, sure as Jesus.”  

In the meantime, watching these guys scramble over themselves to bring whatever paltry supplies of silver that they can onto the market is hilarious and highly entertaining to watch!  

The problem for them is, it’s just not enough!

Continued in Part 3

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