Silver Myths Smashed, Pt. 4: The Coming Silver Lie You Simply Must Be Ready For

post dateOctober 15, 2014  •   post categoriesEconomy, Freedom, Silver & Gold  •   post comments number15 comments

Another one Bites the Dust!

My brothers, we’ve been katana-slicing our way through silver lies for a whole week, like a giddy samurai in a bamboo forest, but I’m not about to give quarter to the enemy now.  There are simply far too many baddies out running around, and history shows when you have lies on the run, you keep pursuing them like a possum with rabies.

For instance, the Audit the Fed bill is now awaiting a Senate vote for the second time in as many years.  Not that I have even one grain of confidence that anything good can come from politics, especially the imperial city’s politics, but I bring that up to prove a point:

10 years ago, there was no such bill with even a ghost’s chance of passage, because there wasn’t any momentum for a bill like that, because, there wasn’t any reorientation of how the masses viewed central banking or money itself.

Now?

Oh, now the Masters of the Universe are struggling, fighting on….just to buy more time!

Now the Money Masters are struggling to keep an explosive audit of the Fed from occurring.

Now the Money Masters are grappling to keep a real audit of the Fort Knox gold from occurring.

Now the Money Masters are struggling to keep a lid on silver and gold prices by giving away the last of the legacy treasure they’ve spent generations stealing.

Now the Masters of the Universe are constantly on the defensive, when in olden times, they were literally unopposed.

That’s why it is crucial we continue to hammer these people: When you have the momentum against a foe, you don’t sit and rest on your laurels, you strike them harder, you hit them faster, and you finish what you’ve started.

Get Ready, It’s Coming

Which brings us to the newest Silver Myth we’ll be taking head on this time around.  The mainstream liars are notorious for using this one.

Thankfully, due to the the bullion bank crime spree in the precious metals sector, we haven’t had to see or hear this lie very much for the last 3 years.  Get ready though: it will be the dominant lie that’s used when all else has failed to stem the unstoppable tidal wave of silver buying that’s to come.

As Sun Tzu said, you do your winning first, and then go off to war.

So, my shield brothers, you must stand ready to face it.  We train early and we train now.

It’s an all too familiar refrain, and it goes like this:

SD Bullion


“With the ongoing crime of market-rigging, this Watchman is raking in the silver, like piles of autumn leaves!”

“Ugh, of course you are Watchman, you’ve always been wrong, because you refuse to admit that…

“Silver’s nothing but a bubble!”

Yoda fail

Ah yes, that’s silver alright!

Just a crystal-clear orb on the wing…floating effervescently above the meandering souls below it, just begging to be ended by the smallest gnat it can find!

It’s been quite awhile since this classic oldie has been played on a radio station near you.  Make no mistake though, this foul and hideous silver lie will again be the #1 hit song played, when the time is ripe.

Bubbly?

As with this silver lie, unsurprisingly, we usually find that those who utter it might as well be trying to speak Klingon, as they haven’t the faintest cosmic idea of what they’re even saying.

What they commonly mean is that they think that investors are only buying it, because they’re filled with delusions of profiting from selling it to the next sucker a few stair steps higher.  To say that this is an over-simplistic idea of an investment bubble, is the understatement of the week.

Sadly, I can somewhat understand their thinking that, as there aren’t many strapping good definitions of the term “bubble”, in relation to investing out there.  For instance, here’s a little squib from Investopedia on their understanding of the term, “bubble”,:

2. A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs.

That’s just about as cartoonish as our own fluffy troll’s understanding, isn’t it?

Let’s just say from here on, for consistency’s sake, that any repeatable definition of the term “investment bubble”, should contain indications that:

1) The investment in question had, by all its historic metrics, now reached price points which were a total outlier in its history,

2) That those outliers were totally unjustified by any fundamental market measurement,

SD Bullion


3) That it had reached those price points on the back of frenzied, aggressive, mainstream participation and buying,  

4) That its aggressive buying had been possibly set off in the first place, due to government intervention tipping the balance in its favor,

5) And that it had reached a state where contrary views were unwelcome and attacked.

Simply put:

If you ask someone if the investment they’re buying is at price levels that are justified by its market fundamentals, and that someone acts as if you’d just called their mama fat, then chances are fair-to-middlin’ that you could be looking at a bubble.

Bubbles Get a Little Help

It’s the 4th criteria above, which is completely overlooked, that I wish to speak to for a moment, though.

It’s a key and crucial fact: governments have, too often, led market participants where they wished them to go, by tipping the balance either in favor of that investment, or against it, through regulations and laws.

Take, for instance, the famous Tulip Bubble, in 17th century Holland.  When things were getting hot and heavy there, instead of of staying out of it, the Dutch Parliament actually passed a law allowing for buyers to void them at relatively no cost.  This helped lessen the risks for the buyers of both options and futures.

Then, to fry the proverbial goose, once the sell-off in tulips began, in a desperate attempt to stave off a tulip market crash, the Dutch Parliament offered to buy tulip contracts at 10% of their face value.  Which, unsurprisingly, helped push the wounded tulip market down the elevator shaft!

Speaking of government-induced bubbles, am I the only one who remembers the curious new word which entered the American lexicon in the 2000’s?  Let me refresh some memories:

“Homeownership!”

Noooooow it’s coming back to you, isn’t it?  It was always said as one word, right?

“Homeownership” just flowed right offa the tongue!

And, to make it even more captivating, it was mandatory that it be preceded by the words “American Dream of”.  Wasn’t it?  That word has kinda been put to sleep now, thankfully!  Come to think of it, so has the term “American Dream”, unless you’re listing things which are ancient history.

Ah yes, Homeownership, now there was a great idea that D.C. and the Federal Reserve had!

Water-boarding interest rates, for such elongated periods, with the intent of making housing available to everyone!  And I mean…..everyone!

“You say you live under a bridge, and haven’t showered in weeks?  No problem, my good sir! Your “instant equity” will make those days a thing of the past!”

No-money-down, ninja loans, with adjustable rates, to the tune of many trillions of dollars, all backstopped by quasi-government organizations like Freddie Mac, and Fannie Mae U.S. taxpayers?

What’s not to like?!

So we all see that governments blow the biggest, most disastrous bubbles, on a regular basis.

It’s just what they do.

Historical Bubble Gains

“But Watchman, silver and gold had been going up for over a decade!  That was uber-bubble territory!”

Well let’s take a look at some historic “uber-bubbles”, and see how silver’s bull market stacks up against them, shall we?

Here’s the famous “Tulip Bubble”, that we mentioned earlier:

tulip bubble

That’s a pretty sweet 6000% grand slam in just over 2 calendar years!

Amazing.  And when you consider that the average skilled craftsman’s annual salary was about 150 guilders, it’s even more impressive.  

This chart shows the movement speed, but not the ultimate price of these bulbs.  Low quality tulips, by 1636 had reached a zenith of roughly 200 guilders!  

In dollar terms, this would mean that a lowly bulb was selling for over $60,000.  Other more rare varieties though, sold for as high as 30 years’ salary for the average craftsman.  Logic-defying!

What about the Japanese Nikkei stock market bubble, which famously formed over several decades ago?

nikkei-225

If you’d stashed your cash into this puppy in 1970, within 2 decades, you’d have blasted off to a 2000% gain!  

Awww yeah!

If you think that these fundamentals were justified though, you’d be wrong, as the ensuing pop has accompanied several “lost decades” within the Japanese economy.  The Nikkei is literally trading at the same level it was in 1985!

Why stop here, though?

Let’s take a look a Priceline’s common stock!

Priceline stock chart

This one is just incredible.

If you’d bought this stock at $21 in 2005, you could have gotten away with highway robbery    charbroiled some nice old lady’s pension    really made an excellent investment decision by selling it in March 2014, for a gob-smacking $1,379 per share, all at a bargain PE ratio for the new owner, of nearly 40!

Excellent value, right?

That’s 65 times more than you’d have put into this fine piece of work just 9 years prior!

Totally legit!

Ladies and gentlemen: those are proper bubbles!  Those are the kinds of things you must keep in mind when the trolls soon come out about silver, and they will!

Silver Compared to Actual Bubbles


“But Watchman, silver was bubbly in 2011, I mean, heck it even virtually kissed the $50 price mark that it hit in 1980!  And you’re still buyin this stuff?  ROFLCOPTERZ! “

Let me ask you something:

If I offered to buy your car or your home from you at the price it would’ve fetched in 1980, do you think I’d be giving you a sweet deal?  How about your stock portfolio, would it just be “A-oh-tay” with you, if I paid you a 35 year-old valuation for it?

Would you sell those things to me, or would you be far more likely never to speak to me again?

Right.  The reason that’s true, is that thanks to the Fed’s perennial policies of inflation, a dollar of yesteryear was much stronger than a dollar of today.  In fact, John Williams of Shadowstats, has observed that for silver to even reach valuations that it did in 1980….

It would have to clear the figure of $500 per troy ounce!

This means the “bubbly” $50 mark it reached over 3 years ago, was a whopping +90% lower than its peak during the Reagan administration.

This means that ludicrous $4(and sub $4) prices it stayed at for years, were a mind-blowing +99% below its 1980 highs.

This means that primary silver miners are pulling their flagship product out of the ground at the lowest actual prices in human history.

This means, that if priced in 1980 dollars, silver is selling for 3 cents on the dollar!

This means that silver’s recent, meager 1100% gain over an 8 year period, was hundreds of times less intense than the 1980 price spike, in terms of speed and price.

I can talk to you til my jaws hurt, about how un-bubbly silver is(and was), but nothing speaks louder than a picture.

So, for good measure, here’s a chart of silver’s inflation-adjusted gains since 2003!

Silver Inflation adjusted

Worst. Bubble. Eveeeeeeeer.

 

Yeeeeeees.  That tiiiiiiiiiiiiny pimple in 2011, was the supposedly bubblicious top that CNBC mocks as total investor greed and insanity!  

I’ll agree there’s insanity, alright….it’s insane to think that CNBC anchors are pulling down 6 figure salaries, instead of flipping my burger at Hardees!

There’s obviously a bubble going on: in overpaid, under-educated, talentless, media lapdogs!  

Isn’t there?

 

Conclusion

Real investment bubbles can objectively be shown to surpass all key metrics of value.

Real investment bubbles are often blown and maintained by banking/government decrees.

Real investment bubbles often fly to the stars, on the back of a nearly unanimous, aggressive participation by common, mainstream parties.  Such as the Dot-Com Bubble, and the Housing Bubble.

The Federal Reserve and bullion banks, through decades of body-slamming the silver “market”, have actually removed silver so far from “Bubble” status, that you couldn’t see it with the Hubble telescope!

Instead of expanding upward and outward, it has been forced inward and downward, through the numerous crimes of these crooked institutions.

In fact, silver has become something far more unusual: it has become a reverse/inverse bubble.

It has far undershot any sane and fair valuations.  It hasn’t just limbo-ed under the bar of rightful value, it has taken the subway, and then jumped down a mineshaft, and crawled safely 5 miles below those bars of rightful value!

The true bubble in the world is the 1 quadrillion(1,000 trillion) dollar OTC derivative market.

The true bubble in the world is the U.S. treasury market.

The true bubble in the world is the U.S. dollar, which is simply a debt unit that the U.S. treasuries are measured in.

Those real bubbles have been propelled where they are, by governments and banks simultaneously smashing silver’s price through the earth’s crust.

But all those bubbles are about to meet a hard, silver wall of reality.

Silver’s moment will arrive.

Silver Brick WallRESIZE

The true bubbles have become such gargantuan monstrosities on the world scene, that a perfect storm scenario has converged for their instantaneous demise.

Greenspan, Bernanke, and Yellen: your errant worldviews, and the bubbles you blew with them, aren’t simply headed for a pin….

They’re headed for a full-on, skull-piercing, acupuncture session…

With railway spikes!

Will it hurt

 

Hurt?  Land sakes, Benny Boo, how should I know?

Bahhhh, I wouldn’t worry about it though, friend!

I doubt they’ll feel a thing….

2008-cenobite-pumpkin

Continued, in Part 5

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