Silver and the Single Dude

100 oz Silver BarI’m the last guy that ever though he’d write a financial article but after hanging out with Boris and el Matador over the years I’ve taken an increasing interest in the subject. These days I never bother going to shitty movies like Avatar any more because those unimaginative hacks in Hollywood just repackage the same tired story with the same talentless actors over and over. For me nowadays my true entertainment is the slow motion train wreck that is today’s world financial system.

I hope you had the time to read Boris’ article on investing in gold when it came out. Since that article came out on July 8, the price of gold has gone through the roof, from a little over $1600 to a high of over $1900 and is currently $1833.70 at last check. I listened to Boris, did you?

Gold is not the only precious metal out there worth looking at as an investment for the single dude. Silver has also been long used as a basis for monetary systems and is much cheaper than gold, at around $42 an ounce. Silver for the most part stayed put during this latest “holy shit” historical rise in the price of gold.

The reason gold is being bid up so high has to do with the world’s growing distrust of the financial system and the growing possibility of extreme or hyper inflation of the US dollar and other major currencies. This is all largely due to the Fed manipulating interest rates to zero and printing money like a crack addict pawning his family’s prized possessions. Gold bugs are seeing gold as a true way to store wealth while boycotting the crooked modern financial system. When the shit hits the fan, as it inevitably will at some point, gold will still hold its value while the US dollar will not be worthy of wiping your ass with.

So why is silver not joining gold on this meteoric rise? The reason is further proof that the “free market” the politicians preach about as the supposed solution to all our problems does not actually exist. Quite simply, the whole silver market is being manipulated by the big bad guys and the price of silver is being artificially held down. There’s some pretty convincing proof in the numbers that the corporate bad guys are in fact holding down the silver price too.

For example look at the long interest versus short interest in gold and silver. According to the excellent blog, Silver Gold Silver, on the 20th of August the long and short numbers on silver were as follows:

In the large spec side in GOLD we see a long to short ratio of (long 264K, short 64K)of 4:1. For every 4 long contracts the large spec buys, he is short one too.

In the silver arena their ratio is (32.5K long, 11K short) 3:1 long bias

Now lets look at the polar opposite.

In the Commercial side, such as JPM et al. on the GOLD side they are long 160.5K and short 410K. LOL. This ratio of SHORT to long is 2.5:1. FOR EVERY GOLD CONTRACT LONG (WANTING TO GO UP) the MORGUE adds 2.5 shorts to it (wanting to go down). Hummm biased. I wonder if their clients know they are this bias towards the ONLY asset class that has returned 20% profits over the last 10 years. And they are short 2.5:1 on it. Makes sense.

Now in the silver arena, we see nothing different, and the trend continues. The Commercials are long 34.5K and short 75K. For a ratio of SHORT to long of 2.2:1

So what that means is that the big banker guys are shorting gold and silver big time. These guys are not stupid. They know what a bullshit house of cards this economic mess we’ve created for ourselves is. It also is becoming more and more clear that the paper market for gold and silver has many, many more pieces of paper that purportedly represent gold and silver than gold and silver actually exists. There is enormous fraud in the gold and silver paper markets and some suggest for every real gold ounce there are 20 or more fraudulent paper gold ounces being traded on the market. This is why at Single Dude Travel we insist that your long term investment strategy must require physical delivery of your precious metals. Make sure you can hold that shit in your hands.

All of this means that once more people start asking for their actual physical metal instead of paper certificates (like Hugo Chavez of Venenzuela just did), there is going to be a real shortage of actual gold and silver to send to these creditors, and the fraud in this market will be exposed. The real price of physical metals will go up like a rocket ship while the paper values crash and burn. It is only a matter of time before this market melts down like a fat American chick’s extra large bowl of Rocky Road at the Omaha County Fair. Hurry up and finish your corn dog, honey, you’re ice cream is melting!

The price of gold seems more difficult for the bad guys to manipulate than silver, perhaps due to higher demand for it as a monetary instrument as compared to silver which is also an industrial metal. They certainly do do it from time to time by raising margin requirements and creating excess short interest. The problem for them is that much of the rest of the world, such as the Indians and the Chinese actually know what’s going on and have bought shitloads of gold already. It’s impossible to stop this gold freight train before it smashes into the paper market full tilt. Silver, however, has been easier to manipulate. The relationship between the price of gold and silver historically tends to stay around 16-to-1. It is currently nearly 44-to-1. What gives? Is gold too high or silver too low? I say silver is too low because of the rampant manipulation of the market.

But if they are manipulating the market, why are they doing it? This is a question that I’ve been mulling over lately and until recently I have not been able to come up with an answer that makes any sense. The most reasonable answer I’ve heard from anyone to date is something along the lines the lines of: “The powers that be are aware (they are not dumb guys) that the system is coming down and in an attempt to keep the party going as long as possible they are holding the metals down as much as they can.”

Ok, that sounds reasonable, but a little incomplete. If that’s true, they know that the end is coming as well as that there will be an inevitable short squeeze on silver which will crush the big silver shorts like JP Morgan. This scenario also doesn’t account enough for the personal greed of the individuals who work for these companies. So what else could it be?

Another possibility is due to the fact that silver has lots of industrial applications such as photography, batteries, bearings, medical, solar energy, computers and other high end end electronics to name a few. So maybe the powers that be are expecting a Mad Max type scenario where all industrial production stops or is severely curtailed and the demand for silver drops off. Ok, maybe, but that also seems farfetched. Most likely, the world will not immediately descend into cannibalism and Cormack McCarthy style dystopia, therefore it also seems unlikely that JP Morgan is betting the farm on us all riding around in armed convoys with face paint and leather helmets.

I’ve been confused for a while about what would be their game on silver. Enter the silver bears.

First of all, well played, sir, that is as good of a comeback to a momma joke as you can get. Moving on to the substance of the video, there is some good gossip on this video.

The best gossip on this video regarding metals is the allegation that the big silver players are bypassing the dealers and going straight to the mines for their physical silver. Hmm… So why would they do that? Well, maybe they know how fraudulent all these silver “certificates”, ETFs and other paper investments really are. This market, along with the entire derivative market is going down like a Bulgarian chalga slut on a mafia douchebag in his $500,000 Mercedes on their ride around the block outside the club. But if they artificially keep the price down long enough to go down to the mine and get the physical, when the market blows up, how much will their physical be worth then?

Lots and lots.

So there’s my theory. Those Wall Street firms are pretty much a free for all. The number one goal for each individual one of those motherfuckers is to make as much money as possible and get it safely out of the country and into their foreign safety deposit boxes or offshore bank accounts before the music stops. Joe Asshole at Goldman Sachs isn’t working 90 hour weeks trying to make Goldman money, or his clients money, or America richer. He’s looking out for himself, his little squid family, his coke connection, and his mistresses.

Silver is perhaps the bad guys’ last escape plan. They’re enjoying this one last little buying opportunity before the end comes. How many ounces will buy a private island in Greece after the fiat system collapses making Euros and the Dollar is worth less than the paper it’s printed on?

Never underestimate the greed and lack of concern for humanity on Wall Street. Just follow the money and you’ll understand why everything happens.

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18 comments to Silver and the Single Dude

  • Elijah Craig 18

    The evil Comex has struck again with a vengeance! With Comex expiry next week and rumors of delivery problems, the criminal cartel’s beat down on silver price (16% in one day!) has left an incredible buying opportunity for the bold. Speculators and weak hands have sold off and I’m looking to buy the dips with weak support at USD$30 and very strong support at USD$27.25.

    If you are a believer in physical metals. you have been gifted with an opportunity to buy on the cheap that won’t come around very often.

  • Elijah Craig 18

    PAGE is already trading for Chinese nationals as of June. Currently offering gold contracts with silver to be added very soon. Trades will be denominated in renminbi and perhaps dollars. This has the potential to be a real game changer…every contract is backed by physical metal 1:1 and you will be able to buy, sell, swap or lease your contracts. Taking delivery should be much easier than from the Comex and PAGE is opening branches and depositories around the world to make this much easier.

    There were two fascinating interviews that James Turk of Gold Money had posted last week concerning PAGE, but I can’t find the links. Sorry. It looks like early Q1 2012 for westerners to trade and perhaps as early as Q4 2011.

    • How and why do we know that the “gold backing” will legitimately be any more 1:1 than some of the western fraud ETFs?

      • Elijah Craig 18

        Fair question.

        PAGE is a futures market and exchange, not an ETF like GLD or SLV. As an exchange, you can take delivery of the physical metal if you wish. You most certainly cannot do this with an ETF, which is nothing more than paper stocks backed by fictitious metal. I always get a good laugh when I hear people say you cannot print gold or silver…yes you can and it’s called GLD and SLV.

        Because PAGE is an exchange, one of your options is taking delivery of the metal. So there is gold or silver backing your contracts, because you can get your hands on it and take it home. The Chinese have been doing it since June. If there were no metals and PAGE failed to deliver, they would default.

        In the U.S. our exchange is Comex. The problems with Comex are many. They make it a real pain in the ass to get your metal out (they would rather you store it with an authorized dealer). Their contract size prices most people out of the market (100 oz. for gold and 5,000 oz. for silver per contract). At today’s spot price that’s US $185K for gold and $210K for silver. Worst of all, bankers manipulate the hell out of spot price through massive shorts, so if you are buying on margin you can (and will) occasionally get your head handed to you.

        Why is PAGE bullish for PM spot prices? The Chinese are offering smaller contract weights so more people can participate with less money. They are opening depositories around the world to facilitate delivery. And they are actively encouraging their people to own PMs as a store of wealth.

        Finally, the Chinese government has every incentive to see PM prices rise. High gold prices are a repudiation of fiat currencies and consequently, western banks want to see it suppressed. The Chinese want gold prices to rise to hasten the end of the U.S. dollar as world reserve currency. Unfortunately, Ben Bernanke is doing everything he can to help them.

        • PAGE is a futures market and exchange, not an ETF like GLD or SLV. As an exchange, you can take delivery of the physical metal if you wish. You most certainly cannot do this with an ETF, which is nothing more than paper stocks backed by fictitious metal. I always get a good laugh when I hear people say you cannot print gold or silver…yes you can and it’s called GLD and SLV.

          Oh sorry, brain freeze, this should have been obvious.

          It sounds like you are right on the money. Between this and the news about the Swiss Franc being pegged to the Euro it sounds like gold and silver have a long way to go in the near future.

  • Elijah Craig 18

    Boris,

    I have the same issue as Sanjay. No new posts since August 24th until today. Browser is Firefox 6.0 and the cache is cleared regularly with C Cleaner.

    On topic: given all of your collective experience with international travel, I would love to see a follow up article or comment on the difficulties and strategies of transporting physical PMs across international borders in larger quantities (say US$ 10K – 75K). Hassle with customs? Import/Export fees? Confiscation?

    With regards to PM price manipulation, I’m really looking forward to the Pan Asia Gold Exchange opening to foreign buyers in Q1 2012. Finally, competition for the Comex. PAGE might just be the thing to loosen the grip of the London/New York/ Chicago PM cartel and allow for truer price discovery. It’s a sad day when western capitalists need to look to eastern communists for free and unfettered markets.

    Thank you “Greatest Generation” and Baby Boomers for this shitty corporatocracy you’ve left us.

    • That’s too bad.. we’re looking at moving hosts. We think maybe it has something to do with that. We have a CDN in place but it’s not the best either. I think you are probably seeing only posts up to the 24th instead of nothing at all… I suppose that’s better but not much. We’re working on a solution. Thanks for letting us know.

      Regarding your question about transportation of PM’s I must admit that it’s a bit over my head. I haven’t tried to do it. I have heard unsubstantiated reports that even US citizens have been hassled and even had gold confiscated when trying to cross borders for not having proper “documentation”. I don’t know if they are true. Another option I’ve heard pushed is to buy coins that double as sovereign currency – the face value is always WAY lower than the metal value but theoretically they should be treated as sovereign currency for crossing borders. For example, you might be able to take $9,000 worth of gold Mexican pesos across a border while staying under the $10,000 declaration limit yet the real metal value would be many times the face value. I also don’t know if this actually works in practice for sure. Does anyone else know? We will try to look into this more.

      Is this PAGE set in stone for Q1 2012?

  • sanjay (uk)

    not sure, it seems to be working fine now anyways, no worries =)

  • sanjay (uk)

    total aside guys but for some reason on your homepage i cant see any articles past the 24th august. the only reason i found this one and the las vegas one is via inmalafide

  • sanjay (uk)

    motherfuckers. i knew they’d pull this shit. yeah pretty spot on the article charlie, silver is mad useful for all kinds of industrial apps. i mean ALOT more than just those listed. its so important. even if everyone found a buttload of silver overnight all over the earth it would STILL be valuable. its used in fricking control rods for fuck sake

  • Trendmillionaire

    Love the article spot on Boris.

    I hope everyone has:
    1) 70% physical gold and or silver

    2) 20% jr. gold and silver miners (stocks)

    3) 10% Call options on SLW SVM and some of the larger gold and silver producers.

    we might as well get richer off the blatant ignorance and stupidity (unless you believe all this was planned…??) of the poliiticans and the central banks and the big banks they represent.

    The collapse of the dollar will be swift and violent. The middle class will feel like they just got knocked off their surfboard by a 19 foot wave and everytime they come up for air another one will hit. They will most likely not understand why everything keeps costing more and more and more and why gold and silver are covered round the clock by CNBC and news stations as their rise seems to never stop. Commodities farmland and oil corn rice sugar will all be rising as well as the food on the shelves.

    I can see this coming from a mile away and I am banking major profits by playing call options on silver each leg up – but everyone I speak to does not even know what I am talking about when I start to show them what is happening. They turn off mentally and daydream, unfortunately this financial reality will be forced right in their faces. I view the current government along with the bernank as the captains of the titanic and the rest of americans as the passengers happily going on a cruise. being told that everything is fine and dandy all the way till the ship hits the berg. However in our current world the lifeboats will be physical gold and silver bars (if you don’t follow finance then I have likely lost you already but if not then right now you are shaking your head and thinking “why on earth would people want gold and silver if the economy crashes and the fait currency system crashes” well, it is just the way it has been for thousands of years – gold and silver are real money). The “lifeboats” are currently being reserved by the elite and the powerful as we speak. google: “silver eagle sales 2011″ or gold bullions sales 2011 or physical bullion sales 2011 and you will see some alarming numbers of physical metals being sold. The wealthy and the smart are the ones buying those, it isn’t joe schmo who is a bit late on his visa payment this month so he’s going to work an extra day just to get back to even.

    follow the money.

    Ryan

  • Hank Hedgehopper

    “they know how fraudulent all these silver “certificates”, ETFs and other paper investments really are”

    Amen. I just had a nice heavy box of silver go into my safe deposit box yesterday.

  • duff

    “But if they are manipulating the [silver] market, why are they doing it?

    maybe these guys have sold more silver than exists for delivery,so to cover their position, the price needs to remain artificaly low or they blow up.

    or….maybe they can dig it out of the ground for 5 bux, and the people buying silver at 40 are dumb as rocks.

  • Steve

    “But if they are manipulating the [silver] market, why are they doing it? This is a question that I’ve been mulling over lately and until recently I have not been able to come up with an answer that makes any sense.”

    Any monetary system based purely on fiat paper currency cannot survive without the active manipulation (i.e. price suppression) of both the gold and silver market. Silver is smaller market, not dominated by big players, and is the money of choice for the common folk, so that is manipulated more aggressively because it is easier to do so than gold. Because if price discovery is allowed and you have gold and silver rising rapidly to its true value, the masses would eventually understand what is happening and lose faith in the system of paper currency and dump it and the entire modern financial system as we know it comes crumbling down. The system is based upon power and control of the public.

  • Random Internet Blowhard

    Remember boys and girls, being Too Big To Fail means YOU get violated with horse cocks when MY luck goes stale. Which is exactly as it should be.

    Short hope and change, long Panem Et Circenses and chaos.

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