Buyers of silver are rejoicing. They can now get more money (silver, like gold, is money) in exchange for their dollars than before. However, as we see from the reactions in the community, there were few buyers.  Cries of woe are heard everywhere. Those who are crying are sellers, including those who say they don’t plan to sell but who really want a high price in case they change their mind by Monday morning.
The purpose of this article is to look deeply into the trading action at the time of the crash.
This episode was not about physical metal:


by Keith Weiner, Monetary Metals:

On Thursday, July 6, in the late afternoon (as reckoned in Arizona), the price of silver crashed. The move was very brief, but very intense. The price hit a low under $14.40 before recovering to around $15.80 which is about 20 cents lower than where it started.

Buyers of silver are rejoicing. They can now get more money (silver, like gold, is money) in exchange for their dollars than before. However, as we see from the reactions in the community, there were few buyers.

Cries of woe are heard everywhere. Those who are crying are sellers, including those who say they don’t plan to sell but who really want a high price in case they change their mind by Monday morning.

If you want to see what it looks like when everyone is thinking of buying, look at the bitcoin market when there is a price drop. The enthusiasm is palpable. Everyone is gloating about buying the dips, with faith unbroken that the cryptocurrency is on its way to shoot past $10,000 if not $1,000,000.

Gold and silver are the opposite. For now. And perhaps that is a sign that here is a good opportunity. Blood in the streets, as the expression goes.

The purpose of this article is to look deeply into the trading action at the time of the crash. First, here is a graph showing the bid and offer prices for about 50 seconds. The horizontal axis shows time, but it is ticks rather than seconds or milliseconds. So, for example, it does not show the 10-second period when CME halted the exchange.

For most of this time period, there is an orderly market as seen in the tight bid-offer spread, though even from the start we observe that on price drops the bid drops more. That becomes extreme where the bid hits $14.10 (which occurs right after the halt). From that point onwards, we see a very wide bid-offer spread. The bid looks to be held low deliberately, around $14.33, while the offer is moving around as buyers begin lifting it.

Let’s address the wide spread. The banks have been under assault for their trading practices. Among other things, they are blamed for having proprietary positions, for “leaking” information during the Fixing, for having a too-large position, etc. The net result is to push the compliance department into prominence. No longer can the bank act when the market offers a profitable opportunity for arbitrage.

Arbitrage causes spreads to tighten, as part of the process of making money.

But before a bank may arbitrage something, they must weigh their proposed trade against the new regulations. And of course, always they must be aware of the optics. It does them no good to make a perfectly legal trade that will bring resentment, more regulatory scrutiny, and possibly litigation.

For example, what is the difference between a “prop” (proprietary) trade, and ordinary market-maker arbitrage? Don’t bother trying to answer this question. Unless you are a commodities lawyer who is intimately familiar with the regulations as they existed on July 6, and also familiar with the current interpretations of the regulators, you cannot answer. Regulations can make distinctions between two maddeningly similar actions, or even identical actions in confusingly similar contexts. On one side of the distinction lies your right to earn a profit. On the other side is regulatory action, penalties, brand damage, and possibly an extended visit to prison.

With such large differences in outcomes, based on such fine lines between actions, you can bet that the banks are backing away from trades they would otherwise take. They are becoming more conservative and making less money. And leaving the market less efficient, more costly to do business in, and more volatile.

In this light, we submit for your consideration the fact that after 23:06:50 the banks were leaving 10 to 12 cents per ounce on the table. That is an attractive profit for a market maker, and it takes a powerful force to keep them from wanting to earn it.

Ironically, the net result of all this pressure on the banks is the opposite of what the gold and silver community wants. It does not cause the price to rise. Instead, it contributes to two other phenomena. One is higher volatility. Crashes like this occur when the stack of bids is thin. That is precisely what happens when banks are under pressure to stand back.

Two is rising costs. The bid-offer spread is the cost of a round-trip. It is one measure of the friction in the market. This cost affects traders, producers, and consumers of metal. Silver has long been the most hoardable commodity for workers to set aside part of their weekly wages, because its spread is the narrowest for the quantities involved. These regulations are undermining silver for this use.

American Silver Eagle Coins Banner

A word on the thin market. Unlike the June 26 crash on (which we wrote about), this one occurred when Europe was asleep and the US was mostly offline. Markets were open in Sydney, and perhaps a few early risers in Asia (7am in China). However, in a liquid market, there would be little impact to such selling even then. Indeed we see in gold, the price drop was $5—hardly worth writing an article about.

Regulations imposed on prop trading, insider trading, position limits, asset reservation, and other aspects of running a market making operation drive down liquidity. Whether this move was triggered by stop-loss orders or something nefarious, we do not know (we can only say that we see no reason why governments or central banks would care about the price of silver).

Here is a chart of what happened in the one minute after 11:06pm GMT, millisecond (1/1000th of a second) by millisecond, showing volume-weighted average price overlaid on number of contracts traded.

At this time scale, we can see there are upticks. Yes even in a crash like this one, there are upticks.

To reiterate what we said in our last forensic analysis of a crash, in a free market there would be no such thing as gold or silver. The futures market is for goods that are produced seasonally, but consumed throughout the year. It is a market for warehousing.

There would be an interest-rate market for gold, i.e. a bond market. A gold futures market is a bizarre creature, created by the artificial environment of irredeemable currencies and laws that force everyone to use them.

In that context, a futures market for gold makes sense in a way. It is a way to bet on the price action, to generate profits in dollars. Like all other derivatives markets, the gold futures market offers leverage so that traders can maximize profits even when price moves are small.

Of course, big leveraged positions mean big risk. That is why they must set tight stop-loss orders. This is one possible explanation for the crash. Initial selling triggered stop orders, and those triggered others, and with a thin stack of bids, whoosh.

And it is also the basis (no pun intended) of our basis analysis. We like to see how much these leveraged bettors are moving the price.

This brings us to the unique Monetary Metals analysis. If the price of spot is falling relative to futures, then we know there was selling of spot. If the price of futures is falling relative to spot, then we know there was selling of futures.

This spread, future price – spot price, is called the basis.

Below is a chart of the silver price overlaid with the September silver basis from 10pm to midnight GMT.

No question, we see selling of futures. Whether these are stop-loss orders or something else, we don’t have the data to say. What is certain is that the basis drops twice. First, just prior to 22:40 when the price is rising. There is some buying of metal here. But then that buying fades and is replaced by buying of futures, thus the basis recovers and rises about 5bps above its initial level.

Then the basis drops, starting just prior to the price drop. So the first bit of selling of futures appears as a drop in the futures price relative to spot, though price does not move much initially. Then the thin bid is pierced, and the price goes over the edge of the cliff.

The basis begins rising, going more +30bps over its starting point. This is a frenzy of buying—of paper (futures).

Other than that brief blip up in price from around $15.88 to $16.10, this episode was not about physical metal.

    • “in a free market there would be no such thing as gold or silver. The futures market is for goods that are produced seasonally, but consumed throughout the year. It is a market for warehousing.
      There would be an interest-rate market for gold, i.e. a bond market. A gold futures market is a bizarre creature, created by the artificial environment of irredeemable currencies and laws that force everyone to use them.”
      Weiner gives a readable account of the absurdity of gold futures in the context of irredemable fiat

  1. Flash crashes and short covering  in silver at the same time that Tahoe will be closing down their silver mine,  the second largest in the world, responsible for 8% of world supply.

    Losing 8% of world supply could easily result in a 20% price increase in my view.

  2. I got the feeling from this article that it is set in a reality that is different from what many of us have observed.

     

    “Everyone is gloating about buying the dips, with faith unbroken that the cryptocurrency is on its way to shoot past $10,000 if not $1,000,000.”

    This is exactly what happens during a mania.  This is what happened in silver and gold in 1980.  Manias tend to be short-lived but intense while they last.  Like a meteor entering the Earth’s atmosphere, though, they tend to be very bright and then burn out quickly.  When everyone and their uncle is talking up an investment is usually an excellent time to be selling it.

     

    “On the other side is regulatory action, penalties, brand damage, and possibly an extended visit to prison.”

    Prison?  LOL!  Other than Bernie Madoff back in 2008-09, just who out there has gone to prison for Wall Street crime?  Anyone?  Madoff was such an egregious case that they HAD to do something.  If not for the notoriety of that case, they would have cheerfully swept it under the rug… as usual.

     

    “That is precisely what happens when banks are under pressure to stand back.”

    Has anyone on here seen ANY examples of banks “standing back” or do they seem to be in the money trough up to their ears and grabbing everything they can with BOTH hands and any toes they can bring to bear?

     

    “(we can only say that we see no reason why governments or central banks would care about the price of silver)”

    Yes, we could say that but saying it doesn’t make it so.  Silver and gold are alternative currencies to the fiat currencies.  They are competitors, so governments that are eager to keep the fiat debt paper Ponzi scheme going as long as possible do what they can to limit or discredit any competition that comes along… including that from silver and gold.  Just watch… when bitcoin et al are perceived as a threat to US$ hegemony, they too will come under government fire in some way; probably via laws and regulations rather than mid-night naked paper shorting.

     

    “The basis begins rising, going more +30bps over its starting point. This is a frenzy of buying—of paper (futures).”

    OK, so it’s a buying frenzy.  But WHAT caused it?  That should be the salient point here and not that there was one.

     

    • “Just watch… when bitcoin et al are perceived as a threat to US$ hegemony, they too will come under government fire in some way; probably via laws and regulations rather than mid-night naked paper shorting.”

      The nose of the camel is already under the tent, with the approval of option sales on Bitcoin. Now TPTB have the tools to control cryptocurrencies. “Wag the dog” is alive and well! Silly wabbit, did you think the wasscally slimebags were going to roll over and play dead?

    • @Bullwinkle

       

      “The nose of the camel is already under the tent…”

      It sure is and that crazy camel has a HUGE nose!

       

      “… with the approval of option sales on Bitcoin. Now TPTB have the tools to control cryptocurrencies.”

      Bitcoin and the other cryptos are of very little interest to me, so I tend not to follow any news about them.  But it is good to pick up such info now and then.  Thanks for mentioning that.

       

      “Wag the dog” is alive and well!”

      It sure is… as we would expect.  After all, it IS one of the elite’s favorite games.

       

      “Silly wabbit, did you think the wasscally slimebags were going to roll over and play dead?”

      No, I did not.  I fully expected them not to do that but I also thought that they might at least come up with a whole new game for this, rather than just recycling some of their old games.  Guess I was just giving them too much credit…

       

    • @Ed_B

      Thanks for your kind comments on my commentary of your commentary, which actually were just comments on your commentary, and not really a commentary… per se. Oh, the joys of a commentary section to voice ones frustrations with the system and share a little humor. In closing…Who’s on First? Yes!

    • lol @Bullwinkle

       

      “Thanks for your kind comments on my commentary of your commentary, which actually were just comments on your commentary, and not really a commentary… per se. Oh, the joys of a commentary section to voice ones frustrations with the system and share a little humor. In closing…Who’s on First? Yes!”

      Yep, and it is good to get a little humor into all that goes on here.  Things get much too serious at times and could use a little brightening up.  Keep on keeping on! 😀

       

       

    • @GBS

       

      Analysis lying in the mind of the beholder?  Could be.  There are some serious mind-games being played these days and the PM markets do seem to receive more than their fair share of them.  But, when dealing with governments, central banks, and others in that rarefied realm, it is always best to observe closely and think critically.  What they DO is immensely more important than what they say because talk is cheap and actions tell a far more complete story than mere words; no matter how carefully scripted and polished those words may be.  As always, bear in mind the key concept embodied in the term, “Cui bono?”.

       

  3. Boo Hoo!  So you are not making an “instant” capital gain? But you are protecting yourselves from a big capital loss.  There is no rule which says that when the bankers reset the system that you are going to make a fortune but there is an unwritten rule that says they are going to transfer as much real wealth to themselves as possible when they do – and if you are in the fiat financial system, you lose.

    There has been much moaning of late on this site.  People should remember that gold (=gold and silver) is not usually about capital gains anyway!  Currently it maybe but we don’t know that for certain.  There are three main reasons to hold gold today:

    1) Prepping.  Tradable tokens to barter with during any SHTF scenario.

    2) Safe haven.  The ultimate protection of wealth, even survival wealth.

    3) Capital gain.  Maybe.  Depending upon future events either planned or unplanned.

    If you trade your gold for fiat now because you are unhappy with the capital gain you lose the possibility of future massive gains (and you must have checked out John Williams inflation adjusted gold price charts surely?).  Much worse you lose (1) and (2) as well.

    In the dystopian economic future that lies ahead unless you are Greek or Venezuelan and have already got the message, in part, (1) and (2) might be called the life preserving properties of gold.

    Sure, sell if your life and the lives of your family are not as important to you as capital gain is.

     

    • Note also that (2) also counts as (3) in the circumstance that your sovereign fiat takes a dive as in the UK where the pound dropped post the Brexit vote leaving some with a pleasing capital gain (OK with wealth preserved).  From a CGT perspective of course it counts as a capital gain.  This illustrates why you should avoid CGT (up to 29%) as much as possible.  It will be far, far more damaging to your wealth than simple sales tax or VAT in the very likely event of a crack-up boom/inflationary bust where, depending upon events, you could even make a net loss if say the price of gold went up 50 times due to inflation.  To protect yourself from this try and buy metal which is CGT free.  In the UK this is simple.  Not only is gold tax (VAT) free entirely but some coins count as sovereign currency and are thus CGT free.  These coins include the British gold britannia and the gold sovereigns which are free of all tax on buying or selling.  The silver Brittania is  GCT free also and can be bought VAT free in some circumstances too.

      Somebody, somewhere in the UK has excercised much foresight.

       

    • Just as everyone was finally accepting the idea of deflation and negative interest rates, inflation decides to pay a return visit. In the past day, articles with the following headlines appeared in major publications around the world:

      Swiss inflation rises at highest monthly rate in 5 years

      China February producer inflation fastest in nearly nine years

      Year-over-year import prices at highest level in five years

      ECB keeps bond-buying, rates unchanged amid inflation flare-up

      Food inflation doubles in a month as UK shoppers start to feel the pinch

      Towards the end of 2015 most of the world’s major governments apparently got spooked by deflation and decided to ramp up their borrowing and money creation. China, for instance, generated the following stats in 2016:

      New loans totaling 12.65 trillion yuan, or $1.8 trillion.
      M2 money supply growth of 11%.
      Debt-to-GDP ratio jump from 254% to 277%.

      In Europe, the European Central Bank ramped up its bond buying program, pumping about a trillion newly-created euros into the Continental economy.

      And the US increased its federal government debt by over $1 trillion, presumably spending the proceeds on things that raise wages or increase the demand for commodities.

      The only amusing part of what’s coming will be the disarray among the economists and politicians who have been advocating a higher inflation target, as if a modern economy is a thermostat that can be dialed up and then back down by an omniscient homeowner. As Jim Rickards likes to say, it’s not a thermostat, but a nuclear reactor that can, if allowed to get too far out of balance, go critical.

    • @silverine

       

      “Somebody, somewhere in the UK has excercised much foresight.”

       

      Indeed they have.  This is usually referred to as a “safety valve” or “safe harbor”.  Those in power have left this route open for themselves to follow out of a disintegrating paper financial system.  But since what they are up to would be too obvious if only they were allowed to participate in gold ownership, this path is open to all.  To prevent a lot of the hoi polloi from participating in this, a very sophisticated campaign of negative psychology has been mounted to make gold ownership appear to be a bad idea while unbacked by anything paper wealth is made to seem a good idea.  This is what they say.  What they do, of course, is the exact opposite.

      Most people cannot afford gold but the so-called elites can, so they make all of the laws necessary to preserve and protect THEIR wealth while that of others is left to be consumed in the fires of dying fiat monetary systems.  This is not just in the UK, however.  It tends to be true just about everywhere in the Western world and the capitalist portions of Asia.

      Silver is a good substitute for gold when one does not have a ton of currency available for buying gold.  It’s likely that silver also will be a fine way to preserve and perhaps even extend one’s buying power / wealth.  But neither of these forms of real wealth are short term endeavors.  This can be seen if people will just ask themselves the following short question:  “At what age do you wish to be completely destitute?”.  If your answer is “NEVER!”, then it is going to take a dedicated effort on your part to avoid that miserable fate by converting a good amount of your paper wealth into tangible items of real wealth.

      Government control is largely based on their control of the currency.  Once fiat paper implodes, even if governments officially do not recognize silver as money, a lot of individuals will.  Silver’s value need not be officially sanctioned to still be useful as a form of settling debts between buyers and sellers.  It is a certainty that fiat currency will be viewed by the vast majority of people as extremely suspect once the current fiat schemes implode and destroy the life savings of billions of people.  I sincerely doubt that the elites have overlooked this as a problem that must be carefully addressed.  They will know this to be true, so must replace this anger with something else of equal or even superior strength… such as fear.  This they will do by creating a new world which is so terrible that ANY change for the better not only will be accepted but will be accepted with wild enthusiasm, hence the description of this as “Ordo ab Chao”.  Human beings will always choose the better-seeming alternative in a crisis but in order to have that choice made, chaos must not only first be present but it must also be extremely painful to most people.  Such is the way of the truly diabolical.

       

    • Ed_B
      Well expressed and you could well be right there!  If so then these sovereign currency coins are unlikely to be expropriated at any time, just the foreign coins and bars perhaps?

      I am not certain how much of an Elite directed device that the sovereign and half sovereign have been left as tax free currency is.  You are right about the masses not appreciating the significance of this of course.  However these are small coins with the sovereign containing just 7.32g ($300) and the half sovereign being just half of this.  The size meant the coins though effectively high denomination were  used for trade when the sovereign was worth exactly one British Pound prior to fiat inflation.  The gold britannia would be better as an Elite directed escape device but the status of the sovereign has not been changed.  Still it does fit with your ideas and I have had similar thoughts myself.

      Silver is a good substitute for gold when one does not have a ton of currency available for buying gold.

      In the States this is doubtless true as I believe there is a more nearly contiguous history of silver being used as coinage/bullion and a libertarian political/cultural linkage.  Less so the UK where silver was removed from coinage in 1947 and the silver Britannia bullion coin did not emerge until 1997 and not making .999 until 2013 (when from dim memory the mintage was 78,000 only(?)). We have a fifty year gap in familiarity with idea of silver equals money.  There is more of a cultural affinity with gold due to Isaac Newton’s rating gold more highly than our continental trading partners viz a viz silver resulting in much silver being exported and gold imported. Also the gold sovereigns are held by many families often in the form of an element in jewelery e.g. sovereign rings and sometimes as commemerative coins such as gifts for golden wedding anniversaries.  Even so many household keep a small stack of old silver coins, many, including myself, not even realising it until I discovered a box full of about 30-40 florins and half-crowns, saved by someone else because of their silver content of about 1/4 ounce (half crown, pre ’47).  These may turn out to be useful in a SHTF scenario as they still have significant recognition amongst the older population.

       

    • Thanks @silverine

       

      “Well expressed and you could well be right there!  If so then these sovereign currency coins are unlikely to be expropriated at any time, just the foreign coins and bars perhaps?”

      That seems about right to me, although the US does maintain close political ties with both Canada and the UK, so their coins might also be allowed to remain in private hands.  This is one of those things that we won’t know until it is too late to do much about them.  I have both US ASEs as well as some Canadian Silver Maples.  I also have a few US AGEs and more Gold Maples.  I only have a few silver bars, which would be considered as mere bullion, so might have rules that are different from those put on coins.

       

      “In the States this is doubtless true as I believe there is a more nearly contiguous history of silver being used as coinage/bullion and a libertarian political/cultural linkage.”

      I can only speak to the US usage of silver in coins as that is where I have experience.  Most people here who are in their 60s or more remember using silver coins as money.  Younger folks do not have that direct experience but may remember their parents or grand parents talking about it.

       

      “We have a fifty year gap in familiarity with idea of silver equals money.”

      That is a long time but it is similar to the US experience, where the last of our silver coins was minted in 1970 and that was the 40% US half dollar coin.  1964 was the last year of 90% dimes, quarters, and half dollars.  US silver dollar coins were plentiful back in the 1950s and 1960s but I don’t recall when the last of them were minted.  I’m thinking around 1935 but that’s just a guess.

       

      “Also the gold sovereigns are held by many families often in the form of an element in jewelery e.g. sovereign rings and sometimes as commemerative coins such as gifts for golden wedding anniversaries.”

      Collectibles are often excluded from gold and silver coin laws, so doing this could be one way of protecting them from a grabby government.  ASEs and AGEs are defined as collectibles here in the US, so should not be grabbed during any kind of monetary / financial / economic collapse.  Should being the operative term, of course.

       

      “Even so many household keep a small stack of old silver coins, many, including myself, not even realising it until I discovered a box full of about 30-40 florins and half-crowns, saved by someone else because of their silver content of about 1/4 ounce (half crown, pre ’47).  These may turn out to be useful in a SHTF scenario as they still have significant recognition amongst the older population.”

      I think that recognition will play a significant part in whether or not certain things are seen as being of real value.  This is what keeps me from buying much in the way of silver rounds or commemorative medals of various kinds.  But I do have about 1,000 ozs. of silver saved up in the form of pre-1965 US 90% silver coins.  In any sort of SHTF situation, people will very quickly learn what is of value and what is not.  Silver-plated cups and cutlery, for example, have much lower value than sterling silver that is almost 92% silver, IIRC.  Most gold jewelry is stamped with the caret number on them, so 10k, 18k, and 22k stamp marks can be seen on most of that.
       But the main point here is that gold and silver are unlikely to be outlawed if they are in the form of sovereign coins.  Bars, rounds, and medals?  Not so much.  Foreign coins might be OK but which ones will work and which won’t is anyone’s guess.  One thing I pay attention to is the tax treatment of various foreign coins and whether or not they are allowed in IRA retirement savings plans.  Canadian Maples and Austrian Philharmonics are allowed while Krugerrands and Pandas are not.  Many people own Krugerrands, nonetheless, but could be surprised one day to have them confiscated as “bullion” rather than as coins.  Outside an IRA, one can invest in PMs as they please but buying anything other than sovereign coins could be risky in a SHTF situation.
      Good info on which PM coins are allowed in US IRAs here:
      https://goldiraguide.org/allowed-in-ira/

    •  

      Ed_B

      I will follow your link later.  You have obviously thought it through and better than I did when I first developed an interest.

      One “problem” we might have in the UK is that bullion dealers are required to keep records for seven years post any PM sales they make.

      Apart from the surprise finding of the 50 and 90% (pre ’21) silver coins I found in the loft simply becoming interested proved profitable.  For example I found a Geoge V gold sovereign in a drawer and know not whence it came.  My cousin returned an old three peny piece she found in a box, sent to her years earlier.  That turned out to be a gold sovereign too!  I also found a small wedding band on the bedroom floor one day.  It was too small for both me and my wife so I added it to the collection.  I suspect she was having an affair with a lesbian dwarf and it didn’t go quite right.  OK I could be wrong on that point but people (and dwarves) do not chuck this stuff around lightly.  An old band in yet another box turned out to contain a half ounce of the yellow metal and some yellow wire turned out to be very soft gold.  Add to that a couple of gold signet rings which materialised (one in two halves which used to belong to me years ago and another inherited) and a few other rings and things I found like a 1 oz Stirling silver pendant with a silver chain, a silver ring and about half a kilo of garnets and I already had a useful prepping collection.  I used to have a kilo of the garnets but my delightful son vacuumed up the other half after they fell out of a slot in a drawer and threw them away.

      I do not know much about garnets and suspect they are industrial but do not know.  I must get them valued at some point.

    • @silverine

       

      Crikey, mate!  Your place is a genuine gold mine!  Nice job on digging up some real wealth.  🙂

      I found an old ring here the other day but am pretty sure that it is just brass.  Nice ring, even if it’s not likely to be worth much.

       

       

  4. I found nothing in this article that is coherent or makes sense.

    Silver is not money.  Silver is an industrial metal.  Gold is money, but gold is heavily controlled.

    Which means you aren’t going to win in gold or silver.

     

    You have better odds trying to become a pro athlete or winning the lottery.

    • Constitutional Tender Act:
      The United States Constitution declares, in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”. This means that no State can make something besides gold or silver a “tender in payment” (which means they cannot “make something else an offer as payment”) for any debts, which would include debts owed by and to the State. However, EVERY State in the United States of America HAS made some other “Thing” an offer as payment – they have by law declared that they will accept, and pay out, Federal Reserve Notes for any debts owed by or to them. Therefore, every State is in violation of Article I, Section 10 of the U.S. Constitution. Thus the need for the “Constitutional Tender Act” — a bill template that can be introduced in every State legislature in the nation, returning each of them to adherence to the United States Constitution’s actual legal tender provisions.

      Gold and silver are real unencumbered money. Fiat is a proxy for money.

      “An opinion should be the result of thought, not a substitute for it. ”

    • @dolph     What do you mean by “win”? The purpose of buying these as alluded to by silverine above is to roughly preserve your buying power in the event of financial turmoil. Silver and gold can be held in your own hand and their existence and efficacy cannot be totally erased by any central bank or government. Their value is measured by weight not by ethereal numbers printed on bits of cheap paper or even cheaper mickey mouse computer records denoted in ones and zeros whether that be bank deposits or crypto thingys. They therefore still have considerable utility bearing in mind their physical nature, portability and convertibility amongst other qualities. They don’t have to comprise all of anyones savings but there is nothing else that really matches the qualities of these two metals.

    • @ dolph

       They don’t have to comprise all of anyones savings but there is nothing else that really matches the qualities of these two metals.

      Exactly!

      People are so captivated (captured) by their little electronic devices and the ‘infallibility’ of the internet that they actually believe what they are looking at is real.   Real things like Gold and Silver to them are just ‘ancient relics’ that have no value or place in the modern world.   Boy…. are they in for a surprising lesson.

    • Agreed @GBS

       

      “Real things like Gold and Silver to them are just ‘ancient relics’ that have no value or place in the modern world.   Boy…. are they in for a surprising lesson.”

      Indeed they are… and a bloody expensive one at that!

      If they had any real intellectual curiosity, they would be asking themselves, “If gold is an “ancient relic”, why is it stacked in the vaults of every central bank in the world?”.  Just asking this question should be enough to create serious doubt about Ben Bernanke’s reply to this of “tradition”, which was ludicrous on its face.

       

    • Silver is not money

      The word silver means money in many languages.

      A pre-1965 silver quarter has about .18 oz of silver in it and would buy a gallon of gasoline at that time.  Today’s spot price of $16 x .18 oz = $2.88 enough for a gallon of gasoline.  Silver is an excellent store of wealth while at the same time is  divisible, durable and transportable.  Sounds like money to me.

      Also, ASE are legal tender in the US having a face value of $1 dollar.  Silver is indeed money.

       

  5. Stacking the pm shiny for safe keeping, just in case the US dollar goes tits up. Pm have been used as real money for over 6000 years. Read up on your ancient world history.. Fiat someday in the US will be used for tp or starting a camp fire. 1% of Americans understand what real money is, gold and silver.

    Stacking the silver shiny one ounce at a time.

    • Exactly! Few seem to understand that FRN’s are merely promissory notes drawn on the Federal Reserve Bank, redeemable for more of the same. In practice, they serve as “guaranteed wealth confiscation certificate’s”, where in time they lose value, in terms of real buying power!

  6. BOTH Gold and Silver have been used for money in the U.S.  Now silver has been official U.S. money ( official minted U.S. coinage for circulation ) for 171 years ( 1794 -1964 ). Gold has been official U.S. minted coinage for circulation  for 139 years ( 1795 – 1933). Silver has 2 sides, both important: Industrial as well as monetary. The “official” price of silver is more then ridiculous. Currently it’s probably one of the best buys of the century.  The ” canary in the coal mine’s” price has been suppressed beyond belief for the longest time. MINIMUM; Silver price up to $600 per ounce & Gold price up to $9000 per ounce at some point once a reset occurs . The system must reset; very probable sometime in 2018. See the many Lynette Zang interviews for the most concise , clear, and to the point supported analysis of the current global financial situation. KEYNOTE: Don’t be bogged down and fooled by the current media induced complacency and confidence paradigm . A change will occur overnight before you can get to your bank. The deep state will not give any prior warning.

  7. The worm turns

    There are those who bought silver at $24 and now see $16–down 1/3

    There are those who bought Bit Coin at $3,000 and now see $2,000  down 1/3

    We still have our ounces.  Crypto buyers still have their Bit Coins

    Who will prevail in wealth preservation in the long run?

    • For me, crypto-currency represents nothing real or tangible, just another Ponzi scheme when the music stops!

      My money is on wealth preservation and my own imperfect analysis of Au and Ag over the past 100 years suggests that Au is probably near its true value ($1200-$1800) while Ag is probably undervalued by a factor of 5). I laugh at those that speculate that PM’s might eventually hit hysterical buying levels 1000-4000% above current levels!

    • @redrubberball…  Your valuations for Au and Ag are probably correct considering the current value assigned to the dollar… by the peoples faith in the dollar.   But what will happen as the dollar hyper-inflates?  The only way to assign future-value to a PM is by what other commodities or assets may be acquired by the PM… whether it be by exchange or a currency reset.  We are conditioned to think dollars… and its hard to think in terms outside the dollar… and it is even harder to imagine future currencies along with their peg or fix to a PM.

      PMs are currently under appreciated by the avg Joe due to lack of real-life experience and a lack of historical knowledge… but Joe will quickly figure it out when his dollar hyper-inflates.   The beauty of physical PMs is that they will always retain value and never go to zero.   The value assigned only fluctuates with the mind and time… and the mindset of people is fixing to drastically change.

  8. Bitcoin is electronic for the most part by far. Cutoff of the internet for any extended length of time will stop most of it in its tracks. It still has a tulip mania aspect about it. People never learn from history. The paper value of tangible assets like gold or silver will probably soar at some point when the paper paradigm of control dissipates or disappears. Please keep in mind while physical Gold & Silver will retain purchasing power they still may in the mid to near final stages of a crowd induced mania go far above  on the upside their purchasing power when at least some of it should be traded or sold..  Crypto – currencies are still using paper monetary units for the most part. A financial reset will probably effect the cryptos significantly. A PM combined crypto currency using bonafide gold and / or silver backed units may be  an answer to combing the PMs with non-manipulated electronic trading. We’ll see. If I was to use a strategy. This would be the historic one used by generational wealthy families: (1) Land, (2) Gold( this includes some  Silver), and (3) Rare collectibles/Art. At this time I would  also include a small but careful percentage in selected crypto currencies in case they really take off.

  9. Gentlemen,

    You just hold your Silver Bullion and Gold Bullionn and some Paper Money and a Strong Food Supply and Fresh Water access and you should be okay. I recommend you ALSO have a plan to get above 300 feet above sea level and VERY GOOD QUALITY Snow Gear.

    Global Warming is Bullshit-

    When the Elite tell you ANYTHING-Its ALWAYS the OPPOSITE.

    Get ready for a NEW ICE AGE.

    Nuff said.

    • Another ice age is already about 3,000 years overdue, so definitely seems in the cards.  On the other hand, all the hot air pouring out of DC, London, Brussels, and Tokyo just might be fending it off.

      300 feet above sea level?  Sounds good.  My house is at about 330 feet above sea level, so should be good.

       

    • AussieFideMaster
       

      Ed_B
      I have been getting up to date on the climate state of late.  It is rather worrying.  While it is easy to demonstrate that AGW is a scam the uncritical true believers are in charge. The result?  We are already moving into a new Dalton/Maunder and thereafter possibly into a new glaciation.  Yes we are overdue for one of those and they can come on almost overnight. I put the next glaciation as starting in 2230 but that could be optimistic.

      In the UK the shortage of salad vegetables last year in December and January was extremely noticeable.  If we get the same thing this year that to me would be pretty much confirmation that the end could begin 2020.  In the UK we import 40% of our food.  It is not a good place to be.

      I am not sure why you think that 300 feet up is a good idea as sea levels will fall when the cold comes.  To me this would be a good idea in the event that the asteroid cometh and that bothers me as I live about 3 feet above spring tide high water mark.

      In my fantasy world I intend to buy a farm, now for sale, that is south of here at an altitude of 495 feet.  For property I always fantasy shop by altitude!

    • @silverine

       

      “I have been getting up to date on the climate state of late.  It is rather worrying.”

      I’m not worried about it because: 1) the Earth’s climate changes over time without any help from human beings; and 2) there’s precious little I can do about it, so spend any worrying time I have on the things that I can affect directly.

       

      “While it is easy to demonstrate that AGW is a scam the uncritical true believers are in charge.”

      They think that they are in charge too but things keep blowing up in their faces that make them look either idiotic or incompetent.  This leads more people to believe that they are full of hot air and not to be believed.

       

      “The result?  We are already moving into a new Dalton/Maunder and thereafter possibly into a new glaciation.  Yes we are overdue for one of those and they can come on almost overnight. I put the next glaciation as starting in 2230 but that could be optimistic.”

      I suspect that there is a great deal of room ± in these estimates.  Unlike some believe, the Earth and its ecosystem is incredibly complex with a huge number of factors involved, some of which counter-act each other, some of which enhance each other, and some that don’t interact in any way at all.  What we do not know about it vastly outweighs what we do know, IMO.

       
      “In the UK the shortage of salad vegetables last year in December and January was extremely noticeable.  If we get the same thing this year that to me would be pretty much confirmation that the end could begin 2020.  In the UK we import 40% of our food.  It is not a good place to be.”
      That is one indicator of slightly reduced temperatures, alright.  Perhaps some greenhouse gardening could help remedy that situation somewhat.  Being on an island is not a great place to be during hard times, IMO.  Well, unless it is a really BIG island, like Australia, which is more likely to be self-sufficient.

      “I am not sure why you think that 300 feet up is a good idea as sea levels will fall when the cold comes.”
      Two things: 1) this is in direct reply to AussieFideMaster‘s comment (“I recommend you ALSO have a plan to get above 300 feet above sea level…”; and 2) cold coming might not be the only problem that comes.  We could see some horrendous storms before that as various climate issues sort themselves out.  My parents lost everything they owned but their car and the clothes on their backs in the 1948 Vanport flood, so family history dictates that we always look for higher ground, just in case that part of the past repeats itself.

      “To me this would be a good idea in the event that the asteroid cometh and that bothers me as I live about 3 feet above spring tide high water mark.”
      There’s not much room for strengthening climatic events with 3 feet of “free board” available to you.  I would be extremely uncomfortable living in such a place, as explained above.

      “In my fantasy world I intend to buy a farm, now for sale, that is south of here at an altitude of 495 feet.  For property I always fantasy shop by altitude!”
      A little altitude is good.  Floods do come from time to time and having some extra altitude means that you are either safe from the floodwaters or have additional time to pack up and get out before they reach your abode.
      Owning a boat would be good too, even if it was not a large one.  A 22-24 foot cabin cruiser or sailboat would be good.  I would own a boat now but for the fact that my wife is terribly susceptible to sea-sickness, so refuses to ever get on a boat for any reason.

    • Ed_B

      “I have been getting up to date on the climate state of late.  It is rather worrying.”

      I’m not worried about it because: 1) the Earth’s climate changes over time without any help from human beings; and 2) there’s precious little I can do about it, so spend any worrying time I have on the things that I can affect directly.

      Actually you ought to be getting worried and doing something about it!  Not the heat but the cold.  I became interested fifteen years ago and became familiar with the work of Landscheidt and his solar torque theory.  It is very much the case that we are heading into a new Grand Minimum solar cycle NOW that will last for 30+ years and I have known about this for some time.  Lots of others are jumping onto this bandwagon right now so you can watch a few youtubes on it if you wish.

      Probably we get a new Dalton, The Russians reckon a Maunder and some say it could trigger the next major glaciation.

       

      “While it is easy to demonstrate that AGW is a scam the uncritical true believers are in charge.”

      They think that they are in charge too but things keep blowing up in their faces that make them look either idiotic or incompetent.  This leads more people to believe that they are full of hot air and not to be believed.

       “Every major prediction has proved false and they only manage to show warming after they adjust the data”

      “The result?  We are already moving into a new Dalton/Maunder and thereafter possibly into a new glaciation.  Yes we are overdue for one of those and they can come on almost overnight. I put the next glaciation as starting in 2230 but that could be optimistic.”

      I suspect that there is a great deal of room ± in these estimates.  Unlike some believe, the Earth and its ecosystem is incredibly complex with a huge number of factors involved, some of which counter-act each other, some of which enhance each other, and some that don’t interact in any way at all.  What we do not know about it vastly outweighs what we do know, IMO.

      I suspect that there is a great deal of room ± in these estimates.

      I disagree on this point.
      “In the UK the shortage of salad vegetables last year in December and January was extremely noticeable.  If we get the same thing this year that to me would be pretty much confirmation that the end could begin 2020.  In the UK we import 40% of our food.  It is not a good place to be.”
      That is one indicator of slightly reduced temperatures, alright.  Perhaps some greenhouse gardening could help remedy that situation somewhat.  Being on an island is not a great place to be during hard times, IMO.  Well, unless it is a really BIG island, like Australia, which is more likely to be self-sufficient.

      “I am not sure why you think that 300 feet up is a good idea as sea levels will fall when the cold comes.”
      Two things: 1) this is in direct reply to AussieFideMaster‘s comment (“I recommend you ALSO have a plan to get above 300 feet above sea level…”; and 2) cold coming might not be the only problem that comes.  We could see some horrendous storms before that as various climate issues sort themselves out.  My parents lost everything they owned but their car and the clothes on their backs in the 1948 Vanport flood, so family history dictates that we always look for higher ground, just in case that part of the past repeats itself.

      “OK that makes sense: Noah’s Ark Syndrome.  If the cold cometh quickly enough the UK will get Doggerland back and I will have to take a dog sled to Scotland to fish through a hole in the ice.  I am a sailor and my last yacht had 2.5 feet of freeboard.  Fun in a 10 but she was a superb boat.”

      “To me this would be a good idea in the event that the asteroid cometh and that bothers me as I live about 3 feet above spring tide high water mark.”
      There’s not much room for strengthening climatic events with 3 feet of “free board” available to you.  I would be extremely uncomfortable living in such a place, as explained above.

      “In my fantasy world I intend to buy a farm, now for sale, that is south of here at an altitude of 495 feet.  For property I always fantasy shop by altitude!”
      A little altitude is good.  Floods do come from time to time and having some extra altitude means that you are either safe from the floodwaters or have additional time to pack up and get out before they reach your abode.
      Owning a boat would be good too, even if it was not a large one.  A 22-24 foot cabin cruiser or sailboat would be good.  I would own a boat now but for the fact that my wife is terribly susceptible to sea-sickness, so refuses to ever get on a boat for any reason.

      “A good way of getting rid of sea sickness is to turn your boat broadside into the big waves as you approach the harbour entrance on the way back in.  Assuming the ground is shoaling you will find all the vomit gets washed out of the cockpit and the crew gets a good wash as well.  They are then so pissed with you they do not vomit again and you all go ashore as clean as when you came aboard, if damp in places.  I have done this with my wife and kids and it really does work”.

      “I do not get seasick”

  10. I really wonder why Doc publishes the always tripe from King Weiner the precious metal anal  yst that hates PM’s.

    All you have to see is this to know its his usual metal hating tude surfacing yet again.

    ” we can only say that we see no reason why governments or central banks would care about the price of silver.

    Really….Its vintage BS from the King of the Weiners…

    • Not being able to see the obvious is not a good trait in those wishing to publish on a metals oriented web site… especially when stated as if it was a virtue.  lol

       

  11. Currencies are analogous to corporate stock shares, at least theoretically. The value corresponds to the health of the underlying economy. That thinking was displaced when direct government intervention in to the economy began taking place. You cannot compare private entities economic capacity with that of an entity that can tax, borrow and spend with no market oversight. People need to deal with basic mechanisms such as supply and demand, governments do not.

    That very basic premise allows a hack like Yellen to claim an economy is robust while in a Depression. Because the currency value can be artificially increased, no mechanism exists to prove her claims are lies. In such a world, price discovery and market determinations are destroyed. So forget what PMs prices should or shouldn’t be, there is no true expression of any asset value….

  12.  

    Justin Case

    Personal experience for me in the UK is that we do indeed have food price inflation appearing in a noticeable way.  It is already hitting my wallet and soon I will be forced to be more selective, apart from in the beer sector which is sacrosanct.

    So it seems the inflation advocates are getting their way without touching a single economic knob.  The spiritless machine of the economy is already disobedient.

    I think food price rises are mainly a delayed response to the Brexit performance of the pound.  In the “end” this has not been too bad as markets respond positively to the idea of freer markets and the leaving of the statist eurozone. It has done the UK economy no harm and there is a solid demand for workers.

    • @silverine

       

      Price inflation is happening in the US as well.  Much of it is disguised via the use of smaller food packages for the same price.  This is a pretty thin disguise but it seems to fool some people who don’t look closely at what they are buying.

      Meat, cheese, butter, and boxed cereals seem to be showing most of the food inflation here.  Fortunately, neither my wife nor I care much for boxed cereals, although we do buy a box from time to time.  Fish used to be a cheaper substitute for other meats but not so anymore.  Good fish, such as cod, salmon, or halibut now cost more than NY or T-bone steak.  While I like fish a lot, that’s a little hard on the food budget, especially with me being the only person in the family who likes fish.  Steak is good and we barbecue quite a lot in the summer.  Any left-over steak is cut up and stir fried with onions, peppers, and a little BBQ sauce for use in burritos.  We also add cheese, chopped tomato, and sliced olives.  Yum!  🙂

      Beer is nicely priced here, so not affected too much by inflation.  The specialty beers from the craft brewers have always been expensive and continues to be.  I get a little of that from time to time when there are good sales.

      Gasoline, hotel rooms, insurance, tuition, and taxes of all kinds are up substantially.  I don’t know where the US Gov or Fed comes up with their less than 2% inflation figure.  It’s probably pulled out of thin air, like much of their other info.  Actually, I DO know where their numbers come from and they are based on making sure that the politically desired number is achieved, so the formulae are jiggered until the desired result is obtained.  That this is 100% divorced from the daily reality seems to be of no consequence to those who are doing it.  They are counting on few people knowing math past basic arithmetic or paying any attention to such things at all.  For the most part, this approach has served them well.  🙁

       

    •  

      Ed_B

      For the most part, this approach has served them well.

      And it has been going on for 100 years.  We have all been taught that inflation is the natural way of things and most believe it.  Well it is a very natural way of theft I suppose.

      Inflation wise things have not been too bad here until recently when I have noticed a big increase in some food prices.  It seems to have been much worse in the States according to the John Williams numbers I have seen – maybe 10% a year for almost a decade.  Inflation figures in the UK have been fiddled over the past decade but not by much last time I checked it out.  Maybe we could add on 1% to the official figures, perhaps a 3%+ total average.

      Likewise the unemployment figures are pretty realistic and there really is lots of work going in the UK. I just wish I were in a position to get paid.  I used to make good money, peaking at almost £25K pcm at the begining of this century and in engineering too!  I am now down to “bugger all”* as you can imagine.

      * self explanatory British expression.

    •  

      Ed_B
      I am sure the craft beer movement in the US has done great things for US beer. Our “Real Ale” movement seems to have originated in about the 70s and arose because of a general revulsion (almost) to the mass produced wallop the Big Breweries were foisting upon us like “Watney’s Red Barrel”.  Today beer is much better, perhaps a little too strong, but we are reverting to “session beer” with no loss of quality.  Session beer tends to be 3.5-4.0% and are for men who spend all day in the pub.  Stronger real ales go from 4.5% to sometimes 6.5%.  Me?  I like 4.0-4.5%.  The Brits have been using American hops for maybe twenty years now e.g. cascade and geronimo and these have made a pleasant addition to UK hops.  I live in hop and orchard country as I guess you know.  The country is full of micro-breweries and the selection is awesome these days.

      I am looking forward to my next beer session in the City.  Truly the most excellent city on the planet for its medieval magnificence, liberality in the positive sense and wonderful beers.

      There is a great deal in the UK that has not gone up in price so much.  Even so wages have not kept up and the peasants are starting to get pissed with the situation so it looks like whichever government is in power they are going to pour fuel on the debt pyre of our nation.

    •  

      Ed_B
      Just in case you are curious:

      The City Jail

      My and my pal were sitting in one of the cells one night having a few beers and counting up how many different police and jail cells we had spent time in over the years.  Turned out we were both equal: six times each!

    •  

      Ed_B
      The BBC was covering shrinkflation in the UK yesterday.  It is far worse than I thought – which is the idea of shrinkflation.  I shall not bore you with the details…

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