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Silver, But No Silver Lining

Commodities / Gold & Silver Dec 12, 2008 - 06:39 AM GMT

By: Robert_Singer


Best Financial Markets Analysis ArticleThe end of our consumer society is on the horizon, which should be no surprise to anyone who took Economics 101. Do we really expect to spend our way out of this mess by buying and selling each other useless cheap stuff from China ?

As the financial collapse gathers steam, gold and silver oracles like Butler , Friedman, Morgan and Turk who have been predicting for years the launch of the price of silver to the moon will see their prophecy fulfilled, but a celebration is not in order.

Being wealthy during the last 60 years of unprecedented prosperity at the expense of the Third World and the environment is one thing, but profiting from a bull market in silver when millions of hungry Americans are living in tent-cities next door is quite another.

A default at the Comex that will ignite the explosion in the price of silver and gold is in progress. Investors turned away from the bullion and coin dealers who refuse to sell silver at the $9 paper price opened commodity futures brokerage accounts. They hope to take delivery of the real thing--silver bars with serial numbers--at the manipulated price of $9 an ounce before the Comex has to shut down and admit they never had enough real silver.

Silver delivery at $9 per ounce is courtesy of The Shorts, the largest concentrated short position by four or less dealers in financial history.

Ted Butler, a brilliant researcher, has been writing about the concentrated short position in silver for years and initially thought the default at Comex would come when the dealers ran out of liquidity, but his research suggested otherwise: “Even when holding extremely large short positions and incurring massive unrealized paper losses, measuring in the many hundreds of millions of dollars, the dealers have never collectively turned tail and bought back their short positions to the upside.”

Shorts to Comex and the regulators: The dramatic price decline in August from $21 to $ 9 is our parting gift to you for looking the other way during our obvious manipulation of prices in the War on Precious Metals. We had to prevent gold and silver from gaining legitimacy as stores of value or consumerism would not have become hyper-consumerism. Mopping up our mess will be easier at $9 instead of $21.

The Comex maintains a guarantee fund and insurance policy to meet a clearing member default, but it has only about $250 million, which is insufficient to cover the losses, but imagine a default at $50 or more per ounce.

Why has the price of silver historically been suppressed, stuck for years in th e $4 to $5 trading range?

The downward price manipulation of silver caused by the excessive and uneconomic short position on the Comex has been the subject of most of Butler 's research. His explanation for market fluctuations are often greed-and-profit but he just as often contradicts himself and writes: “It is my contention that this uniquely large and concentrated short position in silver explains why the price is still cheap. Therefore, in spite of the open losses the shorts are experiencing and the great profits accruing to silver investors, the price manipulation is still in place.” James R. Cook, president of Investment Rarities, credits Ted Butler for the vast majority of investment silver purchased in the past seven years, but when Cook asks the obvious question, “Isn't the manipulated downward price consistent with a strategy to encourage the purchase of silver?”, Ted is unable to provide a greed-and-profit motive and repeats what has become his mantra, “My main motive has been and still remains doing what I can to end this manipulative crime in progress.”

It is manipulative and it is a crime, but Ted Butler is unable to consistently support a profit motive because there isn't one. The Puppet Masters manipulate the paper price of the precious metals downward to prevent gold and silver from gaining legitimacy as stores of value instead of the fiat currencies we call money.

Behind every consumer society is the reality of a credit-based monetary system and a fiat currency. There is not enough gold and silver in the world to back the trillions of dollars required for the industrial revolution and the global consumer economy. Behind every fiat currency is a Federal Reserve or a Central Bank controlled by the same men: Rothschild, Rockefeller, Kuhn, Loeb, and Ted Butler's prime suspect in the “ongoing intentional not accidental” great crime of keeping the price of silver low so investors can “buy a lot more metal”: JP Morgan Chase. "The paper margin calls and technical selling in silver was intentionally planned and forced on us by those who held big short positions.”

One of the more absurd notions that found its way into the history books and the writings of economic experts is that somehow these men were made wealthier from the Monopoly money they printed, the same money that enabled consumers to buy houses, cars, furniture and electronics, i.e. the cheap “stuff” we use on a daily basis. Recall that in 1910 these men already controlled one-sixth of the entire world's wealth, and it was real wealth: gold, silver and raw materials in a world before we had a “throw away" mentality and the planet's ecological structures were still in balance.

The Federal Reserve puppet masters orchestrated the Industrial Revolution, the Great Depression, the stagflation of the 1970's and the dot-com and the housing market bubbles, all of which resulted in unprecedented prosperity.

Consumers can thank the puppet masters for all that “stuff” they have because as Ron (sound money) Paul puts it, “Our current system gives us a free ride, our paper (fiat) buys cheap goods from overseas, and foreigners risk all by financing our extravagance.”

Thank them also for the unprecedented environmental damage and pollution caused by our hyper-consumer society.

We have consumed the resources of our planet; and it's time for a change to a sustainable, non-consumer society. When people still had jobs and weren't scared to go shopping, I recommended The Story of Stuff but, thanks to the financial meltdown, consumerism is on the way out, so now the video to watch is the sequel: The Power of Community – How Cuba Survived Peak Oil.

By Robert Singer

Information about Robert Singer and other articles he has written are on his Authors page:

Robert Singer is a retired information technology professional and an environmental activist living in southern California. In 1995 he and his cousin Adam D. Singer founded IPC The Hospitalist Company, Inc., where he served as chief technology officer. Today the company manages more than 130 practice groups, providing care in some 300 medical facilities in 18 states. Prior to that he was president of Useful Software, a developer and publisher of business and consumer software for the personal computing Industry.

© 2008 Copyright Robert Singer - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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Jan Williams
13 Dec 08, 10:29
Robert Singer

Your readers may want to read other interesting and thought provoking articles by Robert Singer

Laurie Mitchell
13 Dec 08, 13:02
Survive Peak Oil, grow your own food

The Power of Community: How Cuba Survived Peak Oil

Cuba adapted, survived, and thrived because they mobilized their entire culture. They made changes requiring cooperation, adaptability, and openness to alternatives. As one Cuban in the film remarks, “When told they needed to reduce energy use, everybody did it.”

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