
Reason # 2 The Silver Noose is Tightening
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!
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len
September 5, 2014., 6:00 pm •
Thank you for presenting more great comments on the issue concerning silver, gold and the dollar. I would like to both expand on a few of your points, while at the same time I would like to simplify them so those who are not interested in economics can understand them. Point one, the dollar is a faith based currency, yet so are all the rest. No nation today backs their currencies by anything but the full faith and credit of their respective governments. Those who lived through inflationary times in South America and Zimbabwe learned to trust the US Dollar more than their own nations currencies, and many do so today since the US Dollar loses its value slower than local currencies. The US Dollar has been referred to as the cleanest dirty shirt or the best looking horse in the glue factory, it is awful as a currency but compared to other currencies it is the best of the worst (as sad as that fact may be.) The dollar is supported by other nations due to what I call the murder-suicide pact, if the US Dollar dies, what happens to the rest of the currencies worldwide? It is a scenario few in power want to think about, so the dollar gets supported and this will continue until a new currency backed by less debt or something physical comes along. Point two, India, India has been a buyer of gold and silver for decades if not centuries. Those who lived in India when it became independent from Great Britain have seen their Rupees fall in value for years, but at the same time have seen their gold and silver go up in value compared to the Rupee. If nothing else, people in India are practical enough to know what works and what doesn't, and they know full well gold and silver are stores of wealth and have been in the past, and will be in the present and future. Point three, the war on silver (and gold). Many remember the Hunt Brothers and their attempt to corner the silver market but few know that they could have gained some measure of success if they had avoided buying silver through the commodity exchange. Suppose the Hunt brothers bought up silver mines and physical supply and took physical possession of said silver? The Hunts would have ended up as a major player in silver the same way OPEC was a major player in oil. The Hunts didn't realize they were fighting the US Government by buying and pushing up the price of silver, and the US Government will do ALL in its power to keep king dollar on its throne no matter what. Considering that the US supported the London Gold Pool to keep gold in its place and to make the dollar look good, and this was when gold was at $35 an ounce, what do you suppose the US would do to keep gold from going higher today? Gold and silver are the anti-dollar and anti-currency trades. As gold and silver go up in price,the dollar goes down in price, so the US Government and its lackeys (Wall Street and financial media) portray gold and silver as a barbarous relic, a bubble, a bad bet compared to stocks and bonds, using foolish slogans like 'you can't eat gold' (note, according to that logic I can't drink crude oil so oil should be worthless too) and every fool argument under the sun. The war on gold and silver will continue until the US runs out of ammunition, or demand is just too great. It will be a long war so it is best to keep up the fight and think of gold and silver as a truly individual 401K or IRA plan outside the reach of banksters and wall Street hustlers. Thank you wealth Watchman.
thewealthwatchman
September 6, 2014., 9:18 am •
Great points. All currencies and money do require some degree of belief or trust in them. The key to this is to ask the question: is what I'm believing in a rock-solid, capital "T" Truth? If someone built a large bridge out of popsicle sticks, and then asked you to please put faith in the bridge, cuz if you don't, "no one will cross it, and commerce will stop!", well, that's the fault of those who masterminded the idiotic idea of a popsicle bridge in the first place. That's on them! On the other hand, if someone else builds a bridge using concrete, steel beams, and state of the art machinery, with the world's most brilliant contractors and laborers....well, no one has to spend their time convincing others to cross that bridge. They'll do so on their own, because they realize that the system that's been constructed is wholesome, true, and real. Confidence is never a problem when the thing it's based on isn't an illusion, but real strength. Build it with integrity, and they will come. To answer your other point: what will the U.S. govt do to keep King Dollar on top? That's being answered right now: they'll call banking conferences, they'll lease thousands of tonnes of Great British and U.S. gold onto the market, they'll rig commodity exchanges without fail, every day. They'll beat down, and manage price to manage perception of strength. This will only work so long as they've got even one bar of deliverable metal left. Like the London Gold Pool, even these guys have their limits. As Chris Duane has said, "they're powerful, but not all-powerful". When the day comes that they can no longer prosecute this scam, believe me, no one will have to tell us. You're welcome. Don't pay too much attention to day to day price swings, unless it's to buy more at a more advantageous place. It's all a psy-op, it's all to grind the psyches of our community into powder. Stand fast, remember the games they play, and place your faith and belief into that which has integrity. Cheers.
len
September 5, 2014., 7:13 pm •
An interesting article i first noticed on Zerohedge and then on the original site visual capitalist- http://www.visualcapitalist.com/forecast-when-well-run-out-of-each-metal/ Of course, these are only predictions, but it is something to think about as far as gold, silver and fossil fuels are concerned.
Element 79
September 6, 2014., 5:47 am •
Another excellent read from the Watchman, thanks. Len - In your beautiful response you said "Those who lived in India when it became independent from Great Britain have seen their Rupees fall in value for years, but at the same time have seen their gold and silver go up in value compared to the Rupee." If Joe Public can make that thought relate to the Dollar (to which it is equally true) it would wake up alot of people. When I show people who say gold (and silver) are now irrelevant in the modern world of money, I draw a flat line from side to side and overlay with a wavy line going above and below the straight line. When you tell them the straight line is gold/money and the wavy, up and down line is fiat, it seems to help them realize that that is why gold and silver price must be held down or it would show the falling value of their paper currency. Sometimes the simplest demonstations (as with your Rupee analogy) are the best at hitting the idea home of gold and silver still being VERY important in the modern money world! Thanks again to you both.
Reason # 2 The Silver Noose is Tightening | Tatumba.com
September 6, 2014., 8:14 am •
[…] from The Wealth Watchman: […]
len
September 6, 2014., 8:44 am •
Thank you for your reply, Element 79. Here is an easier way for you to explain to others the value of silver. Get a quarter minted from 1964 or earlier. Use the coin as a visual aid, mention the fact that in 1964 just one of these would buy a gallon of gas and today it still can buy a gallon of gas while it takes over three paper dollars to do the same. If that doesn't create a "Eureka!" moment in others nothing will.
thewealthwatchman
September 6, 2014., 9:36 am •
Yes, that's very good, however by the time this ends, that "relative stability" will no longer apply. Remember, in 2011 when the banksters almost lost control, gas was as cheap as one silver dime per gallon. 10 silver cents could've bought you 35 times that much in dollar terms. I remember when Ron Paul pointed this out during one of the TV debates. He said his plan could get Americans a gallon of gas for 10 cents. When this ends, a silver dime might buy you half a tank of gas, or more. A silver quarter will undoubtedly buy a whole tank of gas, and I envision this with a rising gas and oil price as well. Good thoughts, shield brothers.
Chad Weaver
September 7, 2014., 11:11 am •
Great articles and comments. I have been stacking since 2009 with several thousand ounces now. I have to admit. The silver manipulation is getting old. I think this will last as Long as needed for the protection of the dollar. Maybe my three year old son will see higher prices before he goes to college. I am not selling, but I don't expect much anymore either. The system is just papered over time and time again without any real change. The new silver fix is a perfect example of this.
thewealthwatchman
September 7, 2014., 3:56 pm •
I've stated that I expect this to continue until its prosecution is no longer possible. You're right, the last three years are a different script than the previous 10 were. That being said, a perfect storm is developing in this resource, and one day all the games will stop. No one knows what day that will be, but no one will have to tell us when it's arrived. Thanks for your thoughts. Stand fast, and hang in there! Cheers.
TANG
September 28, 2014., 2:37 pm •
Dear Wealthwatchman, Yes, I agree with your vision that the financial collpase is coming. The bankers or governments seems to shut the gate to gold, silver & commodities to increase the support & wealth gain in stock & bond markets. The collapse is very quick & an over-night event. The end-game will come since China, Russia, Brazil want to play with resources based-economy rather than paper-based economy. These countries want to exchange resources rather than exchange paper money.
thewealthwatchman
September 28, 2014., 8:56 pm •
I also tend to think it will be a rather quick event. BroJF once said that these people, have quietly moved to block every exit in the darkened theatre room, before they yell fire. They want as many frogs as possible to be unable to escape the waters when the temperature really gets going.
TANG
September 28, 2014., 11:51 pm •
Dear Wealthwatchman, need more your advices on the thoughts of different governments, bankers to ways to keep driving down the commodity prices slowly & systematically. ? aims to preventing the explosion of deriatives markets at present. Some governments are accumulating resources. Those guys seem to have one mega plan to collapse 2-3 shadow banks & sudden reset of gold price & silver price ??
thewealthwatchman
September 29, 2014., 4:22 am •
That's possible. It could end up happening that way. When something like that occurs though, that would be it, there would be no more opportunity to accumulate anything for the future system. You can be sure they'd wait to do this until the time is right, until they have everything they need to launch the gold trade settlement system. There are no do-overs. It everything has to be ready for that eventuality. -WW
TANG
September 29, 2014., 5:23 am •
Dear Wealth Watchman, seek your expert opinion on the physical market. For the size of physical silver market is very small, several rich guys can buy ALL physical silver from the markets. How the party guys with ways to sustain the supply of the physical silver? China donates some back to markets ? India donates some back to markets ?
thewealthwatchman
September 29, 2014., 11:43 am •
I'm not entirely sure how the Big Players are maintaining deliveries of gold and silver. As Modern Money above states, even seasoned commentators like Powell and Jim Willie are wondering where the silver and gold are coming from. There are only three things we know for certain right now: 1)There are heavy deficits in both silver and gold supply, in relation to demand, 2) they're still finding adequate supply to service the demands, despite that deficit, and 3) this situation won't continue forever. I've wondered about Central Banks continued leasing onto the market, as well as the City of London. The Bank of England at the end of last year, still had I believe over 4,700 tonnes of gold left on the books. No one knows if the gold they state they have is still there, but if it is, it could ensure this game continues another several years. We'll have to wait for the real shortages and delivery postponements to occur, before we start seeing fireworks. That's my opinion at this time. Thanks. -WW