Silver: The Noise is Deafening!

The weak prices for silver and gold during the past three years are a correction to the massive run-up in prices from October 2008 – mid 2011. During that time silver increased from a low of $8.53 to a high of nearly $50. Gold increased from a low under $700 to a high over $1,900. They have been correcting since then. The correction is, I expect, over – FINALLY.
Ignore the noise! The signal is clear: M2 will continue to increase and consequently so will prices for most everything you NEED.

2013 Silver Maples As Low As $1.99 Over Spot At SDBullion!

Silver Maple

From Deviant Investor:

“Beam me up, Scotty!”

“I can’t Captain, the signal is weak and there is too much noise.” (My apologies to you Trekkies….)

That conversation (which did not happen) describes the problem with the silver and gold markets now. There is so much noise, false information and lack of clarity – and not enough signal – real data and understanding.

The big banks put out “advisories” that silver (and gold) will make new lows, and subsequently cover their shorts or add to their long positions. All noise!

Bernanke recently stated: “No one really understands gold prices.” More noise!

Media shills are forever calling for a silver and gold bear market and new lows. (They have been calling for a bear market for a decade.) Noise!

Central banks obfuscate at every turn, while continuing to monetize debt, print money, make certain the banks are profitable, and enable banks to offload toxic paper. Unbacked paper currencies and gold are natural enemies. It benefits certain groups to increase the noise output and distract people from the reality of gold.

The Bank of England is “missing” over 1,300 tons of gold – maybe. And gold (and silver) prices are near three year lows. Maybe the “missing” gold was used to slam the market to those lows. Too much confusion and noise!

I turned bullish on silver back in 2003. I knew it was too high in April 2011 and due to correct. I thought the correction low occurred in June 2012 at about $26. Oops – it happens. When elephants fight, the grass gets trampled. When the bullion banks, central banks, the Powers-That-Be, and politicians pursue an agenda (such as levitating the S&P and pushing gold lower) the rest of us can be crushed.

 

More signal, less noise! Look at the B-I-G Picture!
(approximate prices and ratios – for perspective)

Since August of 1971 Exponential Increase –
42 year Annual Average
Silver up a factor of 14 6.5% *
Gold up a factor of 32 8.6%
Crude Oil up a factor of 29 8.4%
M2 Money Supply up a factor of 14 6.5%
Cigarettes up a factor of 16 6.8%
U. S. National Debt up a factor of 42 9.3%
US Govt. Spending up a factor of 18 7.1%

* The price of silver is currently (August 2013) less than $20 so its annualized increase since 1971 is low, particularly compared to the increases for gold, government spending and the National Debt.

Yes, I know correlation is NOT causality. But if you think it through (using this highly simplified and more or less correct analogy), increasing the money supply is one important CAUSE of higher prices. Suppose you live on a desert island where the price of coconuts is $1 and the money supply normally increases only when the population increases. But unexpectedly the money supply doubles in a few months with no other changes on the desert island. Fairly soon the price of coconuts will rise to about $2. Prices are indeed affected by the total money supply in circulation.

In WWII it was considered an act of sabotage to counterfeit an enemy’s paper currency to create inflation in the enemy country. Now it is considered “quantitative easing,” or “stimulus,” or “beneficial monetary policy.” Worse, QE might be utterly necessary to prevent an economic implosion.

Since 1971 M2 is up an average of 6.5% per year, while national debt is up 9.3% per year. Subtract a bit for population growth and compare to gold – up 8.6% per year, silver – up 6.5%, cigarettes – up 6.8%, and crude – up 8.4%. In the big picture (42 years of unbacked paper currency) prices increased similarly to the increase in M2.

When the 1971 money supply (M2) was about $683 Billion in the US, cigarettes cost about $0.39 per pack. Now that M2 is about $9,600 Billion, cigarettes cost (on average) about $6.20 per pack. Certainly there are other factors, but increasing the money supply increases prices.

Medical services and college tuition increased even more rapidly during the past 42 years. Milk and bread increased less rapidly. It averages out. As M2 goes up, prices for wheat, cigarettes, health insurance, gasoline, “penny candy,” coffee, silver, gold and most things we need go up.
Current Considerations

Will the politicians (in any country in the world) balance the budget?

Will politicians reduce total debt?

Will the military reduce spending?

Is the world on the verge of world peace? (War is expensive!)

Are government programs likely to contract in cost?

Are federal, state and local pension plans healthy or do they need bail-outs?

Are Detroit and Chicago (and Greece, Washington D.C., Argentina, Zimbabwe and others) run efficiently and intelligently with healthy finances? Are there more cities and states in trouble like Detroit?

Will the Central Banks of the world risk a deflationary depression or will they print as much currency – monetize debt – inject liquidity – increase M2 – as needed to keep the system moving and the Powers-That-Be remaining in power?

And if increases in M2 strongly correlate in the big picture to increases in the prices for crude oil, cigarettes, gold and silver, what should we expect for those prices in three to five years?

Correct! The data signal is clear – more inflation, higher prices, and:

Politicians will not stop spending.

Politicians will not balance the budget.

Military spending will remain elevated.

Government spending on Social Security and Medicare will increase rapidly.

National debt will exponentially increase and probably accelerate.

M2 will exponentially increase and probably accelerate.

Most consumer prices will continue to increase.

Food and energy prices will increase substantially.

Gold and silver will increase substantially.

The weak prices for silver and gold during the past three years are a correction to the massive run-up in prices from October 2008 – mid 2011. During that time silver increased from a low of $8.53 to a high of nearly $50. Gold increased from a low under $700 to a high over $1,900. They have been correcting since then. The correction is, I expect, over – FINALLY.

Ignore the noise! The signal is clear: M2 will continue to increase and consequently so will prices for most everything you NEED.

CAVEAT: If our leaders take us (accidentally or otherwise) into a deflationary post-apocalyptic “Mad Max” world, then M2 probably will decrease. I’ll bet the “powers-that-be” want to retain power and wealth and will do ANYTHING to avoid a deflationary collapse.

Are you stacking silver and gold and feeling secure? Or are you expecting central banks and politicians will take care of you with unbacked paper money, promises and more promises?

30 PPM ASAP HealthMAX Colloidal Silver At SDBullion.com!

Comments

  1. @Mammoth This Scotty is predicting prices are heading up. Ain’t that right Captain. Lol



    • This guy is too happy.  Well, Scotty `ol boy, I picked up 56 ASE’s the other day, and I didn’t even crack a smile.  And I said silver was going back up a over a month ago.  But as long as your on the same page, I’ll be your friend…

    • @silverhawk I’m always happy up or down I’m happy. Life is what you make it and I’m well prepared. lol Keep Stacking

    • Cheered me up no end I bought gold last Friday, I should have bought Maaaaples , maaaples :-)  

    • 3 bales of toilet paper last week, okay it isn’t silver but it is trade goods.

    • @Marchas45 – I hear ya.  Stack til I drop, or I’ve bought up all the silver in the world.

    • Hi Charlie, really enjoyed your last two videos. Keep up the positive vibes ya wee dancer. Where you from originally? – my wife is from Helensburgh :-)

    • @Eboy75 I’m from Glasgow been in the States since I was 19. Lol

    • LOL, Charlie!  Gotta love these Silver Recliner Reports!  HA!  But, good God, man, 40 Maples?  Ya do nu tha they com in tubes of 25, doncha?  (sorry, trying to get a bit o’a Scottish accent into this text… lol)
       
      But I DID take your advice, Charlie, and I am now awaiting delivery of 200 gorgeous ASEs from Provident.  They should be here in about 10 or so more days.  Can’t wait to be digging into that box.  I would file a video of that event but don’t use YouTube.  Too bad we canna post our own videos on here directly.  :-/ 

    • Credit where its due Charlie @Marchas45 - silver is goinnngggg upppppp – looks like a good call. Any other predictions beyond this week? Come on ya wee beauty! Hello from the (y)UK, Mark (Eboy75).

  2. There is no such thing as a “correction”, unless they found an error in the way the spot price is calculated in the computer program that determines the current price.  There must be an error, for a correction to take place.  Investment banks that corner a position, to drive the price up or down, are manipulators, crooks.

  3. Let’s see. TPTB continue to:
    Create currency/money (ie. counterfeit wealth). They don’t even print anymore, they just put keyboard entries into ledgers.
    Wage war globally
    Come up with new and creative ways to conjure imaginary wealth (ie. create derivatives that have zero real value)
    Cook the numbers and then tell us how great and grand we’re doing (hey, don’t piss down my back and tell me it’s raining)
    Hand out endless bail outs/ins to failed banks (read losers at the poker and crap tables)
    Hand out endless Get Out Of Jail passes to crooks, thieves, and low-life scum
    Therefore, I STACK STACK STACK STACK STACK STACK STACK STACK
     

  4. Well even if this year corrects to 5% below, still better off than 3% inflation year on year for the last three years. Savings gets you about 1.85%. Plus its shiny and heavy

  5. Charlie   leave the maples in the plastic flips   maples are very pure .9999 so they scratch easily and it shows those little mars easily.
    My pMaples came in 10 packs, sealed to keep them safe and proteected

    • I put them in the tubes well packed so they don’t move and the are the BU ones not the UC ones.
      Pictures taken with cell phone. Lot better than pictures.

  6. LEGAL/REGULATORY AUGUST 8, 2013, 4:47 PM 17 Comments
    S.E.C. Is Said to Press JPMorgan for an Admission of Wrongdoing
    http://dealbook.nytimes.com/2013/08/08/inquiry-into-jpmorgans-trading-loss-enters-final-stage/?_r=0

  7. JPMorgan Exec Bruno Iksil Won’t Face Charges In London Whale Probe: Source
     
    http://www.huffingtonpost.com/2013/08/08/bruno-iksil-charges_n_3728360.html

    • No, it is not. Ever since the dollar was removed from the gold standard in 1971 the only thing that supported it was a deal with Saudi Arabia-that is Saudi Oil. Gold dollar converted to petro-dollar. For as long as the US has its own oil reserves the dollar will exist as petro-dollar, especially if the US manages to carry on its agenda in Syria and Iran. King Abullah is very old and according to some reports was declared clinically dead. Turmoil is coming. As soon as it comes Saudi Arabia will be declared as a state sponsoring terrorism. Oil embargo will follow and America will take thaw its oil reserves. More over they can declare countries holding Federal Reserve notes in their international reserves as drug laundering operations (remember Noriega in Panama?) and refuse to take it in. In some estimates 4/5 of Fed. Res. Notes are abroad. Do you think Finland or Latvia will declare a war on US? Best friends (Britain, Canada) will be publicly denied as well, but will be treated through the back door. That way the US will manage to get rig of let’s say 3/5 of its cash reserves and will base its dollar on US oil reserves. Remember these are gangsters and they can pull a trick out of their ass any time they want and they have the biggest military to protect them.

    • PrometeyBezkrilov

      I think your wrong in your position because it’s predicated on the notion that inflation is chiefly manifested as a price phenomenon, rather than directly attributable to currency expansion … REGARDLESS … of whether it circulates.

      The American banknote (exactly as with all others globally) is the private property of its issuer, which is loaned into existence in a Principal amount at Interest, to serve as a ‘Trade Facilitation Instrument’ for the borrowers. Whether those borrowed notes (or digits) are sent overseas, stored in a suitcase up on a closet shelf, or ‘deposited’ in some account, they continue to incur interest on their float.

      Given, as said, that the entirety of the banknotes are Principal, the Interest is a demand for currency out from circulation, above and beyond the total float. Now, either amortization of Principal and Interest-Service from a static pool causes currency deflation … in turn triggering defaults … or, the Interest-Servict funds must be FURTHER borrowed into existence as NEW Principal, to offset that Interest-driven depletion of circulation.

      So, you see, WHEREVER (or even whether or not) the banknotes are forced onto capture, the Interest exponentially drives the debt load on the economy, which MUST MATHEMATICALLY supersede its productive (or raw materials) capability to endure through excess trade ‘profits’.

      To answer the question put by NetRanger808 … the collapse is an inescapable, systemic flaw in the design of the banknote scheme.

    • “So, you see, WHEREVER (or even whether or not) the banknotes are forced onto capture, the Interest exponentially drives the debt load on the economy, which MUST MATHEMATICALLY supersede its productive (or raw materials) capability to endure through excess trade ‘profits’.”
       
      And therein lies the crux of the current dilemma.  The US economy is not expanding at all, let alone fast enough to cover the cost of the interest incurred via borrowing these notes into existence.  For many years, this was not a problem because the US economy was growing more than fast enough to cover the float.  Now it isn’t.  ”OMG!”, screamed the banksters.  ”WTF do we do now???”.  I am certain that they have no idea but will soon generate a significant war somewhere to justify a massive increase in spending and thereby commercial activity.  Their predictability would be comical if the effects of their antics weren’t devastating to so many people.
       
      “To answer the question put by NetRanger808 … the collapse is an inescapable, systemic flaw in the design of the banknote scheme.”
       
      Agreed.  But I am in awe of their ability to put off the day of reckoning as long as they have, so far, as well as for however much longer they can continue this farce.
       

  8. Well, I still didn’t lose one gram of the silver I bought before 3 years ago.  So I don’t necessarily consider it getting crushed!  

  9. I just love the noise made by those 100oz bars and tubes of Maples as I stack them back into my safe after stocktake. An extra 100oz going in there soon after placing a couple orders just before the latest $1 hike. Aint it grand to be a stacker!
     
    Speaking of noise, has anyone done the ‘ring’ test with Maples and Eagles? Place one coin on the tip of your finger, and tap the edge of it with another one of the same type. As much as I am a Maple lover (due to the lower price and 99.99% purity), there is nothing on this earth like the ring of an American Eagle (and no ugly slave queen anywhere to be seen on it).
     
    Side Note: My dealer uses a back-scatter X-ray gun to spot check the products before I sign for them, and Eagles invariably register 99.99% purity, as do most pieces stamped as 99.9.

    • I use a different method of achieving the “ring test” result.  Instead, I place a silver coin on my closed fist with thumb on top but tucked under the 1st finger.  The thumb is trapped there so I can load some pressure on it.  I then release the thumb, flipping the coin into the air.  Done correctly, the coin will ring like a bell.  US 90% coins do this too, although not as sweetly as an ASE, Maple, or other 99.99+ percent silver coin or round does.  Most people who don’t stack don’t know about this so it makes quite a demo.

  10. I commented last night on the 20 dollar manipulation thread concerning silver and gold correcting and wasnt being manipulated. However tonight (the past hour and a half particularly) gold and silver are being forced down way below the trend line. Either you will see a hard rally up when the NY stock exchange opens in a bit or a hard fall. Last night a head and shoulders fake caused the market to slip for 5 hours, this morning it is being forced down well below the trend, check charts to confirm.
     

    • I don’t know which chart you are watching, Jake, but I’m seeing silver up over a dollar in the past 24 hours c/- Netdania.

  11. Genuine validity of all other ‘indicators’ aside, I’m thoroughly convinced (and HAVE long BEEN) that the decisive element in all of this is the physical availability of silver. It’s gold’s proverbial ‘Achilles Heel’ and once that tendon is severed, the suppression of BOTH metals will lose capability to stand. Even GATA has reluctantly come round to this recognition.

    Coupled with that transition, copper on their one side and the PGMs on their other, will also finally be released too. Quickly afterward, we’ll see natural RATIONALITY form up between all these metals, and … maybe … just maybe … those ratios in juxtaposition to the wider universe of goods, will permit us to FINALLY CHOOSE to completely reject banknotes.

Speak Your Mind