Submitted by SRSrocco:

I apologize for not posting much lately, but I have been busy with other coals in the fire.  Anyhow, I still keep reading articles and blog posts and I am quite surprised at the current bearish sentiment of gold and silver.

When gold and silver sold off after the FOMC minutes (stating that they may stop buying Treasuries in 2013)… I just laughed.  Then I watched as the precious metal bugs started to get extremely nervous… thinking that the BOTTOM COULD FALL OUT.

I am so glad that I have a good understanding of the GLOBAL ENERGY MARKETS & SITUATION as it allows me to steer through all the B.S on CNBC, MSM and etc.  Things are far worse in the energy markets than the typical PUBLIC GADFLY realizes… much worse.


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Now, I am not talking about TODAY or TOMORROW… but coming down the pike shortly within the next few years.  Again, we humans tend to live for long periods of time.  That is why we should behave as such and not as a GNAT that only lives for a brief period of time.  It seems as if the only thing that gets attention today is HYPE and SENSATIONALISM.

I despise both.

I am sick and tired of reading and listening to metal analysts who make forecasts on gold and silver without any regard to the energy situation.  If I had a dollar for every time I read or heard about the GOLD-SILVER ratio… I would be rich.   I just saw CLIVE MAUND’s newest silver and gold update.  How Nice… maybe 1 out of three may turn out for ya CLIVE.


You will not have to wait for the CFTC, GOVT, GATA, the SEC or whatever for the true value of gold and silver to be reached.

Let’s have some patience and realize that fundamentals ALWAYS win out in the end.

I would like to remind you all that the WESTERN ROMAN EMPIRE collapsed because it devalued its coinage.  However, the EASTERN ROMAN EMPIRE flourished for nearly another 1,000 years because it backed its currency with gold.

    • Can someone please tell me why Srocco is talking about the energy markets impact on the metals price…what does he mean when he says that?  Is he talking about Oil or what?  i dont understand.  This guy is one of the better analysts around.

    • Tony, my guess would be he’s talking about peak oil. Oil is one of the biggest expenses for miner….  With depressed metal prices and production cost increases, there is less incentive to develop new mines. But….   just a guess.   And if you really want to freak out, google peak oil

    • Tony : as Peak Oil is behind us, falling EROI means that it gets harder and costier to get good mining grade. That’s for the micro. As for the macro, it is the end of the era of cheap fossil fuel that started some 250 years ago (with the bulk of the distortion in the last century) so everything that go distorted in this time will somehow revert to its true value. Everything that takes lot of energy to make will be valued much higher, and that include gold and silver… but it includes also food, art, etc.

    • Only hype and panic I am watching is gun rights and legislation. Stocking up on imported ammo for my Mosin’s because online ammo sales and especially import of foreign ammo may stop.

  1. Tony, Miners are and will continue to spend more and more money ( more expensive diesel ) to chase lower and lower grade materiel. They will spend more to get less metal.
    Artificially low prices, there will be no supply because the miners would not be financially viable. This is a flipside to manipulation which is as disgusting as anything. They have pushed prices down, and financially crippled mining companies in the process costing jbs and wealth.
    At some point eh manipulation MUST end, or there will be no metal. This will I guess impact base metal mining too, since 70% of silver comes from it.

    • Hey thanks to all of you for answering my question.  I think it is only a waiting game until gold and silver starts to move up….i thnk 2014 is our year……maybe sooner.

  2. Don’t agree with the energy argument whatsoever. Fracking  seems to be lowering the prices, shifting oil use back to transportation and away from energy generation. If all else fails governments will just go nuclear. Just let Fiat do its pyramid selling routine and stick with precious metals. There is not one financial  or geopolitical or geo-economical reasoning that can be applied with precious metals affected, when the prices are controlled through central governments. As precious metals such as silver are seen by central banks as competing currencies. The only hope we have is the continuation of  selling debt as high quality assets. Nothing was learned in 2008, so its the waiting game.

      ore grades are dwindling that cant be argued. fracking has opened up the tight oil market but it still is gettingmore expensive on average to get a barrel of oil.

    • Fracking is neither the devil, nor is it the answer. Anyone who says it is THE singular answer is an idiot, and anyone who says it is disappointing, is simply misinformed or lying.
      Oil recovery through fracking in the bakken and cardiem plays for example have been fantastic. The wells do absolutely drop off faster than conventional wells but the economy is there, business models done correctly work fine and production is going nowhere but up for a while. Keep in mind I’m no expert, but being a business manager for a pipeline and facility construction company, and working with any number of companies in these areas at least gives me an idea of what is going on (as well as numerous investments in the oil companies themselves).
      Inventories of oil and gasoline seem to be piling up because these prices ( which IMO are artificially high for the moment ) have encouraged full throttle production. Short term we could EASILY face oil prices skidding, but in practical reality I feel we’ll have a war if that becomes too big a threat.
      Long term, the trend for everything will have to be up. Economics states that you get the easy stuff first, then the hard stuff. Factor inputs rise, and you’re chasing less rich material so it is a double whammy. Short term. Who knows. Buckle up.

  3. Some key points that will force energy prices higher in 2013 and 2014
    1.  Regulatory and tax burdens increasing in 2013 on all levels of production.  They are always passed on to end users
    2.  Food price increases will be dramatic in 2013.  Food prices in oil producing countries, particularly MENA areas, will force the producers to charger higher well prices to subsidize the food cost increases experienced by the people. Rmember the Arab Spring was all about food price inflation of 20-40%
    3.  Extraction costs of oil and gas will go up.
    4. 50% or more of corn is turned into ethanol, using 1.5 gallons to produce 1 gallon of fuel.  Food prices skyrocket
    5.  Drought is drying soil down to 8 feet in wheat and corn country, creating a perfect storm of shortages and price surges
    6.  Workers will demand greater wages or go on strike, like they are in SA, Brazil and other commodity countries that produce food raw products, fuels and precious metals.
    7.  Fracking is inefficient, costs $60 a bbl to break even.  Each fracking well typically drops by 90% production in 3 years.
    All these factors will increase the  price of precious metal extractions by an exponential rate.  Energy is the root of all these costs increases.

  4. Fracking is not the permanent solution.  At best it’s a stop gap measure.  First, fracking requires a lot of energy in itself.  Second, it is subject to rapid depletion.  Third, it requires enormous amounts of fresh water which is in increasing limited supply.

    You would think we would be using this time to build additional nuclear plants. Nuclear offers the most dense(most BTU’s per pound) energy source available. But hey, that makes too much sense.

  5. Can someone explain the “actual mechanics”  of how the big silver shorters make $$ by shorting silver in a generally up-trending market. Sure they sell short hoping the silver price goes down, which it does.  Do they buy puts that they exercise once they get the price low enough ?  The only time to go long is after a large price smack down and even the it is risky.  It just baffles me that longs on the Comex get eaten alive time after time after time.  Someone educate me !

    • Maybe they aren’t using their money to go paper long. It could be money from certain mutual funds that allow metal buys. I don’t trust these mutual funds and I don’t think they are really looking out for the small investers with 401Ks. Bro. John F released a video some months ago showing how stocks and comodities were being set up. The largest investers “and losers” to insiders illegally trading were the mutual funds! Just a thought.

    • @SilverSmart @sam-hewitt  The big silver shorts are not “shorts” in the way that most people think about “shorts”.  In actuality JPM runs massive managed spread positions.  Their goal is to control of the price, not necessarily make money.  Jim Sinclair has written extensively on this subject.  And he’s one that would know how it all works.  Google ‘managed spread position’.

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