CRITICAL FACTOR: The Real Reason Behind Precious Metal Manipulation

Yes, its true.  Precious metals manipulation has taken place, but the real reason may not be fully understood by either gold and silver investors or their critics.  Lately, I have seen many articles written about this subject.  Even though some articles offered some interesting insight and data, there’s also a lot of misinformation as well as name calling on both sides of the discussion.

While I enjoy using the term “POOR SLOB” on occasion, I used it as a reference that a top ranking banker may see the typical middle class person.  That being said, the personal attacks used on both sides of the aisle tend to make the rift even larger.  This is why I try to focus on the information and data, and let individuals make up their own minds.

Before I get into the real reason for precious metal manipulation, I need to address the motivation behind this article.  First, let’s start with a quick update of the silver market.

Quick Silver Market Update

Concerned about a contagion stemming from a possible Greek Exit in June, the collapsing Chinese Stock Market in Jul-August and the forecasted crash of the U.S. markets in Sept-October, investors purchased a record amount of silver bullion including a surge in physical gold investment.

This surge in physical silver investment caused a shortage in many retail products pushing up premiums and delivery times to more than two months.  I stated in several articles and interviews, that if we did see a continued crash in the markets or black swan event, the silver product shortage could extend into the broader wholesale market.

This did not occur as the U.S. markets recovered, gaining back the majority of losses in a little more than a month’s time.  Amazing the kind of market move that can be accomplished with digital Dollars courtesy of the Federal Reserve.

Dow-Jones-Chart

Currently, premiums on silver retail products continue to decline as wholesalers and retailers get caught up on back orders.  Some analysts and commenters offered criticism by saying a silver shortage isn’t a shortage unless it makes its way into the wholesale market.  While that might be true, when it occurs… it will be the first time in history.

Furthermore, a wholesale silver shortage will likely destroy the highly leveraged futures market.  I would imagine that would cause a great deal of pressure on the silver price… pushing it up to levels unimaginable today.

The Recent Silver Product Shortage Occurred With Three Times The Supply

That being said, the recent four-month (June-Sept) silver product shortage was orders of magnitude larger than what took place in 2008.  According to the U.S. Mint, there were more than three times the Silver Eagles sold June-Sept 2015 compared to the same period in 2008:

Silver-Eagle-Sales-Shortage-2008-vs-2015

For the silver market to suffer retail product shortages with three times the supply (capacity) as there was in 2008, should cause concern for the banking elite.  As I mentioned in a previous article, it wouldn’t take much to totally overrun the wholesale silver market:

Estimated Global Silver Bar & Coin Demand2

When I made this chart, I assumed that 1% of investors in the world purchased the 196 million oz (Moz) of silver bar and coin in 2014.  However, further investigation puts the realistic figure closer to 0.5%… yes, a half of one percent.  So, just a doubling  of silver bar and coin demand of 196 Moz in 2014 would equal 392 Moz.

According to official sources, the highest annual figure for silver bar and coin demand was 244 Moz in 2013.  Which means, a doubling of the 2014 figure of 392 would be almost 150 Moz more silver bullion than the 244 Moz record in 2013.  That would just about empty the total silver inventories (163 Moz) at the Comex.

Moreover, if we had four times (0.5% X 4 = 2%) the 2014 bar and coin demand, it would equal a stunning 784 Moz.  This would totally obliterate the silver market causing the price to skyrocket.  However, I don’t think we would need to see a doubling or quadrupling of investors in silver bar and coin demand to witness an explosion in the silver market.

Why?  Because a relatively small group of large institutional investors worried about the coming collapse the stock and bond markets, could easily acquire 200+ Moz of silver at a paltry $3.2 billion (based on $16 price).  The real fireworks will begin when a surge in silver bullion demand takes place by the management of institutional portfolios.

MARKET MANIPULATION:  To Be, or Not To Be

The motivation to write this article stemmed from a recent piece called Market Manipulations:  The Greatest Scam Of All Time by Martin Armstrong.  While Martin’s title refers to market manipulations in general, he focuses his text on the precious metals… especially silver.

Martin claims that manipulation cannot change the long-term trend of a market.  He states the following:

Throughout history, there has NEVER been a market manipulated TO ALTER its long-term trend – PERIOD. If this were remotely true, then communism would not have collapsed since that was the attempt to eliminate the business cycle. The Swiss peg would not have collapsed, nor would Bretton Woods have collapsed, or anything else in history that has attempt to eliminate the business cycle.

Martin says a market manipulation can’t alter its long term trend, because if it were true, communism wouldn’t have collapsed.  Well, Martin was correct, the Soviet Union collapsed after 67 years (1922-1989).  However, 67 years is a long time.  I would suggest that the Soviet Union surviving 67 years by attempting to eliminate the business cycle was one hell of a LONG TERM MANIPULATION.

Now, I am not saying I agree with Martin’s assumption that eliminating the business cycle destroyed the Soviet Union, rather I am pointing out that 67 years is what I would label as long-term in my book.

Furthermore, the lifespan of the Soviet Union, makes the 44-year-old U.S. Fiat Dollar World Reserve Currency (starting in 1971 when Nixon dropped the Dollar-Gold convertibility), quite a young lad in the whole scheme of market rigging or manipulations.

Getting back to the subject of precious metal manipulation, but first we need to explore the topic of Fiat money (paper money).

Money Can Be Anything… Or Can It?

One of the reasons individuals purchase precious metals, is that they believe gold and silver are a store of value or money.  On the subject of money, Martin stated this in his article, The Economic Evolution:

This theory that MONEY must be tangible destroys all freedom. It is nonsense. You hedge government with your assets. MONEY is not a store of value for it rises and falls in purchasing power with the booms and busts. Just because precious metals were used as coins at various times, does not support this idea that money must be tangible.

There have been hundreds of yearly intervals where money was NEVER precious metals and what about Asia where China never issued precious metal coins. They proved money is simply what everyone agrees to have value. St. Patrick wrote how the Irish used slave girls – not precious metals.

There’s a lot I can discuss here, but let’s focus on Martin’s statement that China never issued precious metal coins.  While the ancient Chinese Dynasties didn’t produce many gold or silver coins, they did produce them.  Here is a silver coin from the Ming Dynasty (1368-1644):

Ming Dynasty Silver Coin

The reason the early Chinese Dynasties did not produce many gold or silver coins was due to their rarity.  Instead the ancient Chinese used iron and copper coins as a medium of exchange because they were able to produce these in much higher numbers as the annual production of silver was quite low.

While ancient Chinese Dynasties did not produce many silver coins, they produced a lot of silver sycees:

Chinese Sycee

(picture of Chinese Silver Sycee courtesy of Anythinganywhere.com)

Information below taken from a previous article I posted in 2014:

For example, during the Chinese Tang Dynasty (618-907: Wikipedia), the annual silver production was approximately 25,000 taels.  One tael equals 1.21 oz.  Thus, 25,000 taels of silver production, equaled 30,250 oz per year.  This is an insignificant figure when we compare it to the production of silver in Ancient Greece from 600-300 B.C., which was estimated to be 25 million oz…. 80-100,000 ounces per year (U.S. Bureau of Mines-Summarized Production of Silver).

During the time (600-300 B.C.) when the Ancient Greeks were producing silver from their massive deposits outside the Laurium region in Greece, the population was approximately 8-10 million.  They produced enough silver to supply each Greek citizen with 2-3 oz each.  This is just an estimation.

Now compare that to the Chinese Tang Dynasty, nearly one thousand years later, that only produced 30,000 ounces of silver annually at a total of about 9 million ounces over the 300 year period (618-907) for a population of 50-80 million (Wikipedia).

Here we can see, that silver was too rare to be used as a form of currency for the typical Chinese.  However, later on, as technological improvements in mining and smelting advanced, China produced a great deal more silver and its importance grew as a currency and medium of exchange.

Even though copper and iron were used in the minting of ancient Chinese coins, the value was based upon the metal content in the coin.  According to Chinasage.info on money:

So, the 700 years of Wuzhi coins came to an end, where the value of the coin was simply value of the metal it was made from. The new coins were in use for 200 years and used in Japan, Korea and Vietnam. By 850CE (Tang dynasty) eight copper mines provided all the copper for coinage. A hundred mints busily produced 327,000 strings of 1,000 cash coins. Each string weighed 6.4 pounds and was roughly equivalent in value to a liang (an ounce) of silver or a bolt of silk or a bushel of grain. Coinage began to generally replace the ‘bolt of silk’ as a unit of currency.

If we assume a string of cash coins consisting of 6.4 pounds of copper, that would equal $14.21 based on today’s copper price ($2.22 lb).  Thus, a string of Chinese copper coins worth $14.21 today (metal value only), would nearly equal the present price of an ounce of silver at $14.95.  So, here we can see that even in ancient China, coins were a store of value based on their metal content.

Now, Martin goes on to say that paper money was also used during the ancient Chinese Dynasties.  While this is true, the paper money was based upon some sort of (supposed) metal backing.  According to history of the Chinese Sycee:

When the empire decided to adopt the paper note policy of its former enemies- the Southern Sung and Jin – the circulation of silver began to be restricted or even banned.

However, this temporary setback did not cause silver to lose its attraction; the unlimited issuance of paper notes by the empire created serious inflation, and as a result, through the remainder of the Mongol Empire, silver was used by people secretly and privately instead of the devalued paper money. People never gave up using silver, since the paper money was debased, and they even resort to barter rather than using paper notes. This situation lasted for several decades until the silver ban was abolished by emperor Yin Zhong (1435-1450, 1457-1464). Silver was once again widely circulated in China, and almost all the surviving Ming silver ingots date from that time.

According to a historical record, officials of late Ming period received their salaries 10% in cash coins and 90% in silver, and all levels of Chinese people conducted transactions using silver.

If the value of ancient Chinese coins was tied to the content of the metal, let’s compare it to the present day U.S. currency.  According to the Fed, the U.S. Treasury Bureau of Engraving and Printing produced approximately $111.4 billion worth of Federal Reserve Notes and the U.S. Mint supplied $783 million in coinage in 2014.

Face-Value-2014-U.S.-Currency-vs-Total-Cost

The chart above reveals just how much more paper currency (in face value) was produced compared to U.S. coins.  What’s even more fascinating is the difference in cost producing paper money versus metal coins.  Total cost to produce $111.4 billion worth of Federal Reserve Notes in 2014 was $657 million compared to $494 million to mint $783 million worth of U.S. coinage.

Basically, it only cost 1% ($1.2 billion) to produce the total $112.2 billion worth of U.S. paper and coin currency in 2014.  I would imagine the ancient Chinese would be quite jealous of this sort of money creation.

That being said, let’s get back to the subject of precious metal manipulation

CRITICAL FACTOR:  The Real Reason Behind Precious Metal Manipulation

Martin Armstrong suggest the follow as it pertains to money:

This theory that MONEY must be tangible destroys all freedom. It is nonsense. You hedge government with your assets. MONEY is not a store of value for it rises and falls in purchasing power with the booms and busts.

The important sentence I highlighted in red.  Martin believes money is not a store of value for its rises and falls in purchasing power with the booms and buts.  Instead, he suggests investors hedge government with your assets.  The critical factor to understand is determined by the future value of these supposes “ASSETS.”

I would imagine the assets Martin is talking about are the typical stocks, bonds, U.S. Treasuries, commodities and etc.   Let’s exclude commodities and focus on the remaining paper assets.

The majority of Americans are invested in paper assets:

U.S. Retirement Market 1974-2014

As we can see in the chart, the total value of the U.S. Retirement Market is nearly $25 trillion.  These are supposed assets, but as I have stated many times before, their value is based on the burning of energy.  And not just energy, but a growing energy supply.

What we really have here is a huge IOU based upon burning future energy supplies to be able to pay back or liquidate these U.S. Retirement Assets.  This is also true for the majority of paper assets held throughout the rest of the world.

Unfortunately, Martin Armstrong fails to consider PEAK OIL and the FALLING EROI – Energy Returned On Invested in his computer pi-cycles programs.  This is a real problem because U.S. oil production is headed towards a rapid decline.

Even though U.S. oil production increased significantly over the past 4-5 years, it did so due to the propping up of the markets by the Fed through massive liquidity and zero interest rates.  This allowed expensive (Low EROI) shale oil to be produced.  However, U.S. shale oil production has peaked and will likely fall precipitously in 2016:

Top-4-Shale-Oil-Fields-Production

News keeps coming out showing a continued slow down in the U.S. and world economies.  This will put even more pressure on oil prices.  According to a recent article by energy analyst Art Berman, only 1% of the Bakken breaks even at current oil prices:

Only 1% of the Bakken Play area is commercial at current oil prices. 4% of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs.

The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that they produce, the very definition of waste.

Although NYMEX prices are about $46 per barrel, realized wellhead prices in the Bakken are only $30 per barrel according to the North Dakota Department of Mineral Resources. At that price, approximately 125,000 acres of the drilled play area of 10,500,000 acres is commercial (green areas in Figure 1).

PIC-Art-Berman

The reason only 1% of the Bakken is breaking even is due to its low EROI.  Shale oil in the Bakken has an average EROI (Energy Returned On Invested) of 5/1.  It takes 1 barrel worth of energy to produce 5 barrels for the market.  Now compare this to U.S. domestic oil production EROI in 1970 at 30/1 and in the 1930’s at 100/1.

Even though the U.S. Suffered a Great Depression in the 1930’s, many companies still made profits due to the fact they were producing 100 barrels of oil at a cost of only 1 barrel.  Bakken oil production needs high prices to be sustainable due to its high decline rates and very low 5/1 EROI.

In addition, the majority of companies producing oil in the Bakken from 2011-2013, when oil prices were above $100, didn’t make much money (profits) as their huge annual capital expenditures had to pay for continued drilling.

Again, the Fed propping up the banks and the market with $trillions in liquidity while lowering interest rates to zero allowed Americans to continue buying things they couldn’t really afford and allowed the shale oil companies to service their huge debts with extremely low rates.

The world is sitting on a mountain of debt and paper assets.   Both need a rising energy supply to be paid back or liquidated.  The coming collapse of world economic activity will destroy the ability for the public and private oil industry to produce expensive oil… thus production will fall considerably.

As oil production continues to decline in the future, it will put severe pressure on the very assets Martin Armstrong believes are better owning gold or silver.

The real reason for precious metal manipulation is the funneling of the world’s wealth into FINANCIAL ASSETS, rather than physical assets such as gold and silver.  Of course, financial assets did make sense for quite a while as Global oil production continued to increase.  However, PEAK OIL IS HERE.

I Agree With Armstrong On Real Estate… But For Different Reasons

This is Martin Armstrong’s Real Estate Business cycle chart:

Real-Esate-Cycle-Armstrong

Martin shows the Real Estate Cycle topping in 2007, falling briefly to 2012 and then rising to 2015 before crashing all the way down until 2033.  I see a similar pattern, but not due to just a cycle chart, but because U.S. domestic oil production will likely be down 80+% by then.  If the U.S. is producing more than 2-3 million barrels per day by then, I would be surprised.

The coming collapse of the U.S. Real Estate market will not be due to a cycle chart, but rather the massive decline in domestic oil production, including coal and natural gas.  Some readers may think this is absolute nonsense, but I can assure you, it isn’t.

There are many analysts out there who continue to believe that there is all this untapped oil in the United States or abiotic oil that continues to refill oil fields.  Well, if that was true, the EROI of U.S. oil production would have not fallen from 100/1 in the 1930’s to less than 10/1 today… with the average Bakken well at 5/1.

Unfortunately, individuals who are presented this simple logic still adhere to crazy conspiracy theories.  The think the elite are hiding oil in untapped oil fields in Alaska and etc.  Don’t they realize there are thousands of private oil geologist who can read oil field maps and underground geology?

CONCLUSION:  Peak Oil Will Turn Assets Into Liabilities

The problem with most of the complex analysis done for large investors, institutions and hedge funds, it excludes the impact of falling energy production on most assets going forward.  This isn’t surprising as returns or profits are based upon quarterly analysis.

We are heading into a future that we have no experience.  It goes well beyond the forecasting of cycle charts.  When I visit large cities, I wonder what it will look like in say 5, 10 and 20 years.  How do you run Chicago, Manhattan, Dallas or Los Angeles on a fraction of the oil we are using currently?

Precious metals values have been manipulated for many decades.  While some analysts such as Armstrong believe long-term manipulation of a market is impossible, I bring up the example of the Soviet Union.  The Soviet Union lasted 67 years even though it eliminated the business cycle… stated by Armstrong.

The value of precious metals are extremely undervalued due to the fact that investors have been hoodwinked into holding DIGITAL WEALTH & PAPER ASSETS.  The massive siphoning of investors funds into financial assets over the past 40+ years severely depressed the demand for physical gold and silver.

Unfortunately, no one is informing investors that financial assets are FUTURE IOU’s based on the burning of energy.  Highly intelligent analysts and investors tend to look at the world with blinders on.  They don’t consider the entire picture.

Lastly, declining energy production including the falling EROI will destroy the valuation of most paper and physical assets.  Gold and silver will be two of the safest stores of value to own in the future.  I have no idea how high the value of these metals will reach, but they will vastly outperform the majority of most stock, bonds and real estate.

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49 Comments on "CRITICAL FACTOR: The Real Reason Behind Precious Metal Manipulation"

  1. HI Steve

    I have read that that Natcore has successfully eliminated silver from an all-back-contact silicon heterojunction cell.
    Have you heard about this? It sounds like it could be bad for the silver market going forward.

    thanks.

    • Barry,

      Believe that later when they prove it by bringing the product successfully to market. There have been many headlines about replacing silver in products like phovoltaic cells. I have yet to see proof in the marketplace. My background in chemistry, physics, and my degree in Geology tells me the properties of silver can’t be replaced by other elements, at least not cost-effectively. At least without using extreme cold for superconductivity. And still silver if the most reflective element.

    • Their press releases about this offer few details. There will certainly be disadvantages to not using silver. What is that and to what degree? We don’t yet know. Is this process appropriate for all solar cells are just certain applications? What is the driver for doing this? Is it cost reduction? Any other advantages? We just don’t know yet.

      Mike

  2. great article but I do not believe in the peak oil scam. I do believe in the abiotic oil theory that colonel fletcher proudty spoke about along with others like Jerome Corsi. Peak oil is just for the current elite oil barrons to keep “scarcity” alive and well and keep prices high as long as they can. Do you really believe this oil is “fossil fuel”?

    has anyone looked into some of what Lindsey Williams has said about the abiotic oil? was the oil in gull island really shut down by congress? maybe someone can look that up?

    what about John Perkins book on confessions of an economic hitman where he states our country trying to capture all the natural resources from the 3rd world countries? most of which is oil?

    it seems as if the whole world is in a contraction and with more kinds of energy being found it seams like oil will not be needed as much? what about the plans of the Demonic evil elite bastards that want the worlds population decreased by 90% like they say in agenda 21?

    that alone will make oil even more abundant? what about the huge natural gas fields that were found in the quatar area and what about the huge oil deposits found on the Golan heights area that Israel now controls?

    the elite bastards that control the worlds largest oil companies want to control everything to do with energy especially oil. they don’t want any competition so if they can control the whole nation by getting them into debt and have them put up their natural resources as collateral they can control all the oil..

    sorry to ramble on but there are just too much info out there that is not mentioned that has an affect on oil…

    • Yes Michael, we try to squeeze oil out of rocks and tar sands, Shell lost billions on difficult to reach oil fields, and we pump seawater in conventional fields, just because there’s plenty of oil.

      The gap between wishful thinking and gravity grows wider and wider. 293 ‘owners’ per ounce of gold on the Comex, the Swiss national bank buys Apple stocks with printed money to diversify, democratic processes are being disturbed, world trade collapses. SRS is correct imho, affordable energy is a thing of the past. The consequences will mess up the whole economic and political status quo.

    • Oil us abiotic and “fossil” adjective is ridiculous for people who know physics. The fossil theory comes from mainstream bad science (earth being a ball and evolution). I imagine Steve will criticise me here, so I’ll say: make you own research.

      That being said, although I think there are no fossil fuels, it doesn’t mean oil fields replenish at the same pace as we extract it… in that case the origin of the oil is irrellevant, and the eroi is key factor, being significative the different speeds in consumption and replenishing.

    • ” I do believe in the abiotic oil theory…”

      No science behind that belief, and no proof either, but one is free to believe what suits them.

      • Plenty of science behind the abiotic model. Plenty. Actually, the idiotic model is the fossil model. If you believe that fairy tale, it’s Ok for me, but don’t tell me there is no science behind the abiotic theory, because you’re just showing how ignorant you are regarding geology.

        • Apparently you don’t have a science background. And no degree in geology.

          Rocks, which some seem to believe oil comes from, are not made of hydrocarbons. Oil is. Plants and animals do contain hydrocarbons.

          • I most likely have a bigger science background than you, but that is completely irrellevant.

            That’s the good thing about science, I can be wrong or right regardless of my scientific background.

            Do your research and then contact me again.

        • Regardless of how where or where oil comes from if it is replenishing itself it isn’t at a rate that is commercially or economically viable. Oil formed in the past is likely a process going on but incredibly slowly compared to consumption rates.

          As one with a BS in Geology and having worked for the U.S. Geological Survey I can say very few modern/current geologists pay much attention to abiotic oil theory or supposition, but it doesn’t matter. Petroleum geologists are damn good at finding commercially viable oil. They aren’t missing much. It is possible deposits may be under Antarctic ice or environmentally protected areas.

          I guess if one is a believer in abiotic oil, he or she may hang out and communicate with other like-mined individuals, and by extension think a lot of people with Geology or related degrees feel the same way they do.

          Again though the origin[s] of oil are at best an academic discussion relative to available supply of commercially viable oil from a cost or EROI basis.

        • If there is so much credible evidence, mind you give us some “credible” citations from peer-revied, international and high quality geology journals to read up? Thanks.

          CHX (person with an extensive science background)

    • EROI now and in history is a fact., not a matter of opinion.

      You have the right to also believe the earth is flat if you so choose.

  3. Love your articles Steve!

  4. “This is an insignificant figure when we compare it to the production of silver in Ancient Greece from 600-300 B.C., which was estimated to be 250 million oz…. 80-100,000 ounces per year (U.S. Bureau of Mines-Summarized Production of Silver).”

    300 years of production of silver at 80-100,000 ounces per year would be 25 million ounces, NOT 250 million ounces.

  5. I think the obvious point here is that after the US closed the gold window in 1971 western central bankers were able to create the largest debt bubble in history with pretty much all financial assets such as stocks, bonds, and housing becoming massively overvalued. When this bubble blows all these paper assets will vaporise. The massive amounts of free money has also created large oversupply in so many areas from commodities such as iron ore, coal, to cement, cars, apartments, container ships etc. Would this have happened if gold backing of the US dollar had been strictly enforced (but the gold price revalued upwards in 1971) during this period? I doubt it.

    I try to avoid Arnstrongs’ rants against precious metals because more often than not what he is saying is either misleading or just incorrect. Armstrong’s continual denial of blatant decades long precious metals manipulation is embarrassing to say the least and says much about the man’s character.

    David Stockman however paints a much more sane and accurate view of the world.

  6. Armstrong comes out with some conflicting stuff sometimes. I enjoy his posts. But I believe one blog entry was removed, about a journalist having laptop confiscated to reveal contacts – I mean either the govt has access to everything or it doesn’t, why the need for confiscation if everything is compromised anyway. He seems conflicted at times, which always got me wondering if he did a deal to get out of prison – let alone dead.

    So far he has been right. He called this last spike to initial resistance at $1182, and if we go down to final low in next six months then that is impressive. But how much cash is on the sidelines because of him???

    Hope we little folk don’t get the misdirection.

    He also seems preoccupied with defending the wealthy against any social responsibility. To the point where govt is destructive in his sight only when me and my rich mates are called into question. For example, isn’t the US healthcare system from the supply side incredibly corrupt? Does not Obamacare just feed the beast, rather than he create socialism bogeyman to take the blame.

    I believe his social commentary is wanting. How much cred can he carry out from his successful capital flow models…

    • Armstrong is a neo libertarian, ie all libertarian theory with one thing added : they want a state because they know if it would not exist, people like him will finish at the end of a rope.

      By the way, he has no idea of real history was, but he can only impress the neophytes with photos of old coins and a few names of roman emperors !

      That does not mean he cannot be accurate with markets but that’s another issue.

  7. Good report! Why keep on producing when “losing $11 to $38 on each barrel of oil”? Similarly, why producing silver when the price is below $16? When miners announce record output, start new project! I do feel very uneasy!

  8. OutLookingIn | November 6, 2015 at 9:45 am |

    Martin Armstrong was ‘singing’ a different tune when he was still in prison. Gold friendly.

    With Jim Sinclair’s considerable help and backing, along with a sizeable portion of the precious metals sector, Martin Armstrong was eventually released from prison.

    Since he has been out from behind bars, his “tune” has changed 180 degrees, including attacking Jim Sinclair and the precious metals community. Talk about biting the hand!

    Years ago I used to read Martin Armstrong’s ramblings. Not any more. He’s a crackpot. IMHO

    • For a pure capitalist like armstrong, only money matters : just money and only money, it is the only judge in life. That’s said I do not know how jim sinclair still shows his face in public and is still CEO of a nearly defunct company.
      After having been so wrong, in a normal world, he should have disappeared a long time ago.

      • OutLookingIn | November 6, 2015 at 5:44 pm |

        RD –
        Obviously, you have not researched Jim Sinclair’s track record. Those that have followed his advice over the past 37 years, as it pertains to gold, are on the whole, up.

        But I will not fault you for following Martin Armstrong’s direction. To each their own.
        Good luck with that. You’ll need it!

  9. One of the best and easiest to understand
    articles on the monetary system in relation
    to metals

  10. Human nature has many faults one of them is bias.
    We only accept facts that coincide to what we have personally experienced.
    EROI a characteristic of the Law of Thermodynamics and exponential growth/consumption which is counter intuitive to our brief lifespan and linear mentality CANNOT be accepted without education and training.
    Like the little girl told by her mother that there is no money to buy her doll who angrily responds by grabbing her mothers check book and while thumb flipping though the unwritten checks cries
    “What about these?”
    But someone may say “yea but we are adults we know better”. Knowledge is confused with our dominating subjective reality.
    For an example, ask anyone, while standing still, who witnesses the path of the sun and moon from one horizon to another “Are you moving?” They will respond no.
    Then ask them does the earth rotate? If so how fast?
    The responses will amaze you!
    Then explain that the circumference of the earth is ~ 24,000 miles and one full rotation takes 24 hours.
    Amazingly even with a college education they can NOT do the simple math! Their mind’s perception of reality WILL NOT accept it!
    Even our Language betrays us!
    Sunset and Sunrise! The sun is not going anywhere! the Earth is rotating!
    Rotating at 1,000 miles an hour!
    Is there any wonder why less then 4% of the population holds all the wealth?

  11. It’s a good article. The vote is still out on the peak oil. Some say yes, some no, some say in the middle. Some bite back with new research methods, better equipment, etc. Some say synthetic. Since the petro dollar is tied to oil the article has merit. Further it removes the curtain to announce the obvious,..it’s all about paper.

    Those of us bitten in the ass by paper have made a life study of why? This has revealed many things to different people. But the sound board is if you can’t reach out and touch it, you don’t own it. This has been further tested and proven before our eyes from the source itself,.. the banksters. After all,.. the next bail out,… is a bail in. Dumped your cash in the bank??? Bye-Bye paper.

  12. “The real fireworks will begin when a surge in silver bullion demand takes place by the management of institutional portfolios.” : that is what ted butler has been waiting for 3 decades with absolutely no reality.

    • Physical silver demand by investors has tripled in the past 7 years, so I would say that using the phrase “absolutely no reality” is misleading. If we triple again in the next 7 years things will get real exciting.

      Mike

  13. silverfreaky | November 6, 2015 at 6:04 pm |

    What an investment.All predictions from the pumpers are wrong.
    Yes we have manipulation.But we have them had in both directions.Otherwise the miners must have been broken a long time ago.

    no inflation->no increaing PM-prices.Very simple.The physical demand is to weak.
    It’s time to accept that this was a dead investment.

    • OutLookingIn | November 7, 2015 at 9:42 am |

      “… was a dead investment” ???
      How do you explain gold being the ONLY investment that is still up, compared to other “investments” during the past 15 years? Dead? Only in your head!

  14. Jacques Rueff | November 6, 2015 at 7:47 pm |

    Hello Steve,
    I was wondering if you would like to update this statement, from June of this year?
    “By the end of this year, or let’s say by September/October, I think it’s a perfect scenario for things to get out of hand. If people don’t buy silver right now, I really don’t think they’re going to be able to find it in the future.”
    Regards,

  15. Wizard of oz. | November 6, 2015 at 9:03 pm |

    One thing no body seems willing to mention is the supposed free energy machines. since we know the elite are at least ten years ahead of the rest of us, they could unleash these “hidden” devises at will. Throwing a King Kong sized monkey wrench into EROI theory, curbing “global warming” and all other nonsensical theories, leaving paper money to reign supreme for many more years. At least until this group of paleo relic loving community is dead and buried and all evidence of them ever breathing is wiped from the history books. Just sayin’

  16. You finally got it Steve. Only one in every 200 people invest in silver. Call it fear, a hedge or whatever but if the manipulators and billionaires aren’t buying then a new currency will emerge. All us silver
    suckers were conned by the gurus. Butler has been preaching $100 silver for 40 years. Morgan’s
    forecasts never hit the mark. All gurus not only sell gold and silver but they are the hucksters. If you
    were right, all miners would have gone bankrupt since 2011 but none have, You started out with a $30
    production cost now its $15? The Silver Institute’s figures clearly show that consumer demand for
    “stackers” is darn near insignificant further proving that there just a few of us fools that believed
    demand would exceed supply. And what boggles my mind is that when that occurs those “in charge”
    of manipulating will replace silver with a digital currency. The answer is, we lost Steve,

    • Joe Lindell,

      Always a pleasure reading your positive comments. Maybe you should forget about silver and take up stamp collecting. I would gather you would be a much happier person.

      steve

      • That’s not a response to what I said. Don’t get teed off Steve. India has tripled input. Coin sales are sky high. Miners, according to your reports are losing millions and on and on. Now it’s totally the manipulators. So what do you do about that. These big banks will come
        up with an answer and it won’t benefit silver. All the articles you’ve written are falling apart
        especially those on mining costs. If what you wrote was the truth simple supply / demand
        economics would raise the price of silver. Even today, there are 200 people owning the
        same ounce of silver on the Comex and no one cares? So telling me to collect stamps
        must mean you are ticked off that all your research is almost worthless.

        • ” If what you wrote was the truth simple supply / demand
          economics would raise the price of silver.”

          dude, the game is rigged such that supply/demand is utterly extracated from the pricing mechanism (for now)

          “Butler has been preaching $100 silver for 40 years”
          well, if it reached $50 in 1980, and given housing has gained 300% in that time, and most other commodities have risen on average 180%, why would it be unreasonable to presume a potential 100% gain in silver?

          if you think the manipulators will keep control forever, you dont understand one thing: the longer it goes on, the more vicious the upside explosion, and the more vicious the upside explosion, the more tempting it is for one of the manipulators to break ranks with their conspirators and cash in big time

          • You may be right but you also miss my point. Steve has been printing article after article since 2010 that I’ve read of all the reasons for a monetary collapse.
            That sir is 7 years ago. Who wants to listen to an analyst forecast 25 years from
            now. Good grief. Under that type of scenario, Morgan, Schiff will sell tons of silver and gold to people who believed their short term hype when in real terms
            I could say that in 25 years silver will be worth more than gold. Most people
            invest for the shorter term i.e. income and gains to supplement their income. With all these silver gurus everyone buying silver since 2011 has lost money
            each and every year. If you have no specific time frame on your prognostication then it is simply opinion. And no investor can survive on opinions. What should I do now for next year is the question not for 2025 or 2035. A full blown idiot can be correct saying silver prices will be higher in 2020 than they are in 2015..

    • “Call it fear, a hedge or whatever but if the manipulators and billionaires aren’t buying then a new currency will emerge.”

      JPM is alleged by many closely following PM’s to be a silver manipulator..and they are amassing a huge stockpile of it.

      “Butler has been preaching $100 silver for 40 years. Morgan’s
      forecasts never hit the mark. All gurus not only sell gold and silver but they are the hucksters.”

      If Morgan or Butler sell physical silver I’m not aware of it. And the “gurus” may be wrong, or just have their timing off, but that doesn’t mean they are hucksters.

      “The Silver Institute’s figures clearly show that consumer demand for
      “stackers” is darn near insignificant….”

      Show me where The Silver Institute has written that.

      “And what boggles my mind is that when that occurs those “in charge”
      of manipulating will replace silver with a digital currency. The answer is, we lost Steve,”

      Sure the authoritarian repressive trend is towards cashless society and digital currency. That is economic, political, and sociological manipulation. But silver is essential to many industries including the last stand against antibiotic resistant bacteria. Industry will have to have it. The majority of silver [roughly 60%] is used industrially. They will have to buy it from somewhere. So while gold has been the gold standard of money for thousands of years, since it has few industrial uses, silver may be a better store of value in time.

      If physical cash is outlawed and all currency transactions digital [other than trade, barter, or black market of course], one could argue why save anything physical as a store of value that isn’t approved by the powers that be. I consider that to be a defeatist attitude. There are plenty of people who own gold; I doubt they will see their gold become worthless becasue of what a repressive government or banker’s cartel does.

    • I didn’t lose. I bought silver at $19 sold at $42 and just bought a whole lot more. I trade futures and there are two rules. Buy low sell high. And don’t blame others for your mistakes.

  17. silverfreaky | November 7, 2015 at 9:26 am |

    When we are in zero interest rate phase, the money flows in stocks.The fincial system in the USA is pumped up but not the real economy.Strange that the folks trust this politicians and elect them.

    The FED is not for the public wealth.It’s for the rothshilds,….
    Only inflation can help a little to solve this problem.The money circulation must raise.Only more money in the hand of the workers can do that.But there are forces in the USA, much more than in other countries, which block that.
    Maybe steve is right about the oil.At the end without a growing economy you need inflation, otherwise it’s a race to the bottom.Or they cut the debts.But than the dollar is history.
    Let’s wait for Dezember.If the Fed again do nothing, we will see what happen.

  18. Robert Macaulay | November 7, 2015 at 9:42 am |

    I would like to mention that one has to believe the Bible taken from the origional manuscripes. I have descovered that our Father God has everything under control, Don’t blame Him for the problems of this world, I think that He has the price of silver so low that He wants His children (who know) to be able to get by when the anti-christ (instead of Jusus) shows up in the near future. he will have all the gold and silver coins to give to people if you worship him, and that is a no-no.

  19. silverfreaky | November 7, 2015 at 9:52 am |

    Last time i read an article that they controll the gold price to drive the small caps miners to ruin.Then the big producer incoporate them and everything is in banksters hand, because they are already controlled.

    But this is only imaginable for US-Miner.What about the other miners?Scratch?

  20. Steve,

    “If we assume a string of cash coins consisting of 6.4 pounds of copper, that would equal $14.21 based on today’s copper price ($2.22 lb). Thus, a string of Chinese copper coins worth $14.21 today (metal value only), would nearly equal the present price of an ounce of silver at $14.95. So, here we can see that even in ancient China, coins were a store of value based on their metal content.”

    This is a brilliant demonstration of the inherent value in metals. Their relative values based on their natural scarcity plus the energy required to mine and refine them.

    However, this belies the very notion of metals manipulation. A couple of thousand years ago silver was worth 6.5 times the value of copper and, What do you know? – It still is.

    It is NOT the metals being manipulated but the DOLLAR. For over 100 years the fatcats and bureaucrats have used their economic and government military power to enrichen themselves at the expense of the rest of the world. This house of cards has been maintained by the force of the US military and the imposition of the US dollar as the worlds reserve currency. It is now very near it’s tipping point. The coming credit/liquidity crises will make 2007-2008 look like a walk in the park.

    When all of the people with their heads in the sand finally get the wake up call that the dollar is not worth the paper it is printed on and might better be used as toilet paper because you may not be able to buy any. Only then will the cost of gold and silver skyrocket but only in terms of the fiat currencies. They will still have only their inherent value which is based on their relative natural scarcity and the energy required to mine and refine them.

    There are a lot of reasons that make silver the best choice for a store of value today;
    1. It is very cheap at around $16/oz. near or at the hard costs of mining and refining. (74/1 for gold but only 9/1 coming out of the ground)
    2, It is rapidly approaching its peak and will become more scarce than at any time in recent history, and
    3. Its value is comfortably aligned with its volume making it a very good medium of exchange.

    Silver is so cheap because it has not yet been remonetized. It is being treated worldwide as a mere commodity and with declines in manufacturing and production worldwide there is simply not the demand. Historically 50% of silver demand was for industrial uses,

    Humans have developed energy intensive but highly efficient systems of removing and using commodities to make life easier for most of us but the earth is a finite resource.

    We have probably reached peak oil and are nearing peak gold and peak silver. Based on the average of 2,550 MT of gold and 23,000 MT of silver mined (2005-2014) and the USGS estimates of 51,000 MT gold reserves and 17 billion MO silver reserves worldwide (USGS 2011) we have roughly 20 and 23 years left respectively until virtual natural extinction.

    Combine those facts with population projected to be 9 billion in 23 years, the relative scarcity of silver will be much, much higher and so will its relative value.

    Silvers time is coming but it will not be because of any manipulation of the metals but rather the collapse of the US dollar.

    Buy for cash and stash!

    SteveW

    ps; From this perspective copper looks like a mighty good long term investment with 25 years until its virtual natural extinction.

  21. The official unemployment rate in the USA is a joke.In Germany the value should be instead of 6% maybe 10%.

    But in the USA we talk about 20%.That is unbelievable.I think the US-bond buying from other countries is the last action to hold the fiat money system together.But china already sell 500 Mill.(german notation) US-Bonds.
    On the other hand i think the worldwide central banks will support this as long as possible.

    When they increase the interes rate about 0,25% and we take 20Billionen us-debts than we talk about 50 Milliarden more money for credits.That is a lot of.

  22. silverfreaky | November 8, 2015 at 1:18 am |

    I think that simple calculation about the higher interest rate is not right.
    It depends at the actual rate of the bonds.The effect we cannot calculate what the bond holder do with their bonds.

    A risky action.Yellen maybe will not sleep good when she decide to raise up the interest rate.

  23. White Line Fever | November 8, 2015 at 7:43 am |

    Mr. Armstrong is just an overrated back-tracker, rarely read his posts anymore.
    He has been wrong so many times on different calls, so why shouldn´t he also be right once in a while?

  24. Silvrwillwin | November 8, 2015 at 8:01 am |

    Onward with the spewing of philosophy and endless words all quantifying and qualifying the gross performance of something called “silver”.

    Until the miners grow a pair and the physical holders of Ag start to stand for a more realistic price per real OUNCE , the charades will go on.

    The world of paper make believe wall street , central bankers , bullion banks , CME ,the Comex , and whatever other circus act that exists today , will dominate the price of “silver” to their advantage.

    Financial miracles are made up by the week . The million dollar question as Doug Casey has put it recently on Moneywatch is , ” when will we be facing the back wall of the eye regarding the major hurricane that we’re in the middle of right now ? “

  25. What i get sick of is..if you talk up the $US, you are an “investor” if you talk up the metal you are a “pumper” I call bs if you are in $ you are still shilling you’re book…so all the paper pusher’s (usually .gov employees’) should just stick a sock in in it.

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