Knowing about this event is important for all Smart Investors and required learning for all Silver Bugs & Stackers. Oh yeah, and there’s also the chance to…
(by Half Dollar) When a person becomes interested in gold & silver, over the course of learning, specific events will no doubt come to stand out in market history. From Nixon closing the gold window in 1971 to the 2016 Election Night Smackdown, the common thread among these infamous events is that they demonstrate the extremes that are taken to induce a certain outcome. One particularly egregious event is commonly known as the Silver May Day Massacre, and knowing a little bit about this event is important for all Smart Investors, and this is required learning for Silver Bugs & Stackers.
On Friday, April 29, 2011, the silver price nearly broke through $50, and there was a ton of excitement in the silver community. You know how there has been a ton of excitement around certain things that have really taken off in price in the markets over the last year? Yeah, kind of like that. Therefore, the Cartel, which is not some shadowy group, but rather, is a specific group consisting of the Exchange Stabilization Fund (within the US Department of Treasury), the Fed, and agents acting on behalf of one or both, took some specific actions to squash silver’s price rise and to kill the bull market. When the markets opened on Sunday evening, May 1, 2011, shortly after the open, silver’s price was hit for over $6 in only a matter of minutes, and silver’s plunge, as well as the brutal bear market, had begun.
It is important to look at some of the context around the Silver May Day Massacre to get a clearer understanding of the “whole of manipulation” approach, for lack of a better term, which continues to this very day, because suffice it to say, the Sunday night price hit on silver was massive, but that event was only one facet of a multi-faceted attack for the Cartel to achieve its goals of squashing silver’s price rise and killing the bull market.
SUNDAY! SUNDAY! SUNDAY!
Sunday evenings aren’t just for going to the monster truck show at the local coliseum, you know. In fact, Sunday night is the preferred night for the Cartel to make a move when the stakes are the utmost highest. Perhaps you’ve heard about Nixon closing the gold window, commonly called the “Nixon Shock”, in which then President Nixon addressed the nation, and the world, really, and he announced the suspension of the convertibility of the US dollar into gold?
Well, guess what day that event fell on?
You see, when it comes significant events in general, and events impacting gold & silver specifically, bad things happen on Sunday evenings, including the Silver May Day Massacre.
SILVER MARKET MACHINATIONS
So they hit silver’s price for over six buck in a matter of minutes when the silver “market” opened that infamous Sunday evening ten years ago, but how did the Cartel succeed in getting the follow through needed to continue the downside momentum?
Enter the margin hike.
With the convenient cover of major price volatility, “margin hikes” were announced for traders in the paper silver futures market, and the margin hikes had a huge impact on getting the follow through the Cartel needed to keep silver falling in price. That is to say, traders trade paper silver futures contracts on “margin”, which is a type of loan, and “margin” means that instead of having to pony up all of the money that’s needed to trade one single 5,000 ounce silver contract, which, at a price of $50 would be $250,000, traders are allowed to trade contracts with only a small fraction of the total cost of one contract. If the silver price is falling, a trader who is “long silver”, meaning they bought a contract expecting a rise in the silver price, is losing money because the silver price is falling, and so the margin needed to trade the contract is often times raised, so the trader needs to come up with more money to be able to stay in the trade, or the trader will be forced to sell the contract. With five margin hikes in a matter of nine days following the Silver May Day Massacre, suffice it to say there was a whole lot of selling going on.
Indeed, from silver’s Friday, April 29, 2011, spike high of $49.21 to the Friday, May 6, spike low of $33.04, we are talking about a drop in the silver price by over 32% in one single week:
The injuries sustained were fatal to silver’s bull market, and a particularly nasty multi-year bear market is what followed.
THE DIVERSION AND THE PROPAGANDA
No significant event in precious metals infamy happens on its own. There is always a diversion.
For example, on November 8, 2016, Indian Prime Minister Modi announced the ban, or demonetization, of the two most common circulating bank notes in India, the 500 rupee note and the 1,000 rupee note. That event was significant in gold market history because Modi’s banning of the bank notes immediately thrust the Indian economy and markets into chaos and turmoil, effectively crushing Indian gold demand for months to come, and, arguably, forcing a not insignificant number of Indians to use some of their savings, gold, simply to survive.
What was the diversion that kept the world’s attention off of the cash ban? The same night that Modi announced the cash ban coincided with the US Presidential Election in the US, with all eyes glued on the Trump versus Clinton results.
So, was there any significant event that served as a diversion on the Silver May Day Massacre of 2011?
There was, indeed, and a huge one on top of that: The Death of Osama Bin Laden.
Around the globe, and certainly in the United States, all eyes were glued to the Osama Bin Laden news, a near perfect diversion, and back in 2011, the mainstream media already had an easy time with spreading the propaganda against silver.
Let’s look at some snapshots from archive.org to see how the news, events, and propaganda unfolded throughout the week.
Silver hits its record high (not all-time record high) on April 25, 2011:
And yet, at 10 p.m., silver was an afterthought, showing up only once on Bloomberg’s homepage and with a heavy dose of propaganda beginning with the very article title itself.
On Friday, April 29, there were times when the silver news wasn’t even, well, news:
What’s that sound?
Oh yeah, it’s the sound of crickets!
On Sunday evening, May 1, after the massacre had already taken place, there was still the sound of crickets coming from the MSM:
At the time, the MSM Propagandists were strictly adhering to Rule #1: Avoid reporting on silver at all costs unless it absolutely can not be avoided.
And then the news of Osama Bin Laden began to hit the tape in the early Monday morning hours:
And so, in conjunction with the mainstream’s avoidance of silver, the Cartel now had its diversion.
By Friday, May 6, silver’s price had fallen over 32% from the week before, and Silver Bugs, Stackers and other Smart Investors really got run over by the Cartel:
Although unlike roadkill left on the side of the road, the mainstream media was doing their best to make sure nobody noticed the mess.
While it is true there has been a decades’ long active price suppression policy against gold & silver, especially silver, at one point, the Cartel will lose the ability to suppress silver’s price in the way that silver’s price has been suppressed for the last several years. Silver is pretty much the only thing in the entire world which has not made a new, all time record high after forty-one years, and arguably, silver has a whole lot of catching-up to do in order to return to fair value.
Moreover, when we adjust silver’s 1980 all-time record high for inflation, when we consider the massive amount of debt that has been taken on globally over the last several years, when we consider the fact that real interest rates are already deeply negative by some measures, and when we consider so much more, the conclusion is clear: Something spectacular is coming soon to the silver market.
And speaking of spectacular, check out what SD Bullion is doing:
On second thought, that’s not spectacular, that’s life-changing!
Thanks for reading.
Paul “Half Dollar” Eberhart