-- Posted 1 December, 2010 | | Discuss This Article - Comments:
There has been a lot of negative press about the big banks rigging the silver market, fake silver inventories in large ETFs and regulators at the CFTC not doing their job by enforcing commodity laws in the COMEX Silver markets.
Well, I'm here to tell you to BLOCK OUT all that negativity and sink your teeth into everything GOOD and HONEST about silver! And there is a lot to sink your teeth into because...
EVERYBODY LOVES SILVER!
Silver is the "FEEL GOOD METAL". Unlike gold, the world doesn't need to fall apart for silver to be in high demand. When the economies of the world are ROCKIN' demand for industrial silver explodes as goods made with silver are flying off the shelves. One of the biggest problems in Western economies is the burning demand for clean energy that doesn't rely on Middle Eastern oil. Due to Silver's excellent conductive properties, Silver plays a significant and increasing role in the new solar power infrastructure. Silver can be found in everything from flat screen TV's to washing machines. We ALL use Silver EVERYDAY as it is the most versatile metal in the world.
Silver also plays a very significant role in bad times...in times of trouble. This is because silver has a very established history of being a valuable monetary metal. Silver has been used as money for more than 6,000 years. When all is said and done there are only two real monetary metals...Gold and Silver. Over the last 3,000 years Gold has been the money of bankers and Silver has been the money of THE PEOPLE. As the banker population represents less than 0.01% of the global population, 99.9% of the human population LOVES Silver more than Gold!
Let me show YOU just how much EVERYBODY loves Silver:
THE US FOUNDING FATHERS LOVED SILVER
In 1776 the US Continental Congress unanimously authorized plans to create a Silver coin due to the rapidly depreciating "Continental" (America's first failed attempt at fiat money) but it wasn't until the Coinage Act of 1792 that the first official US Silver Dollars were coined. The weight and size of the first US Silver Dollar was based off the widely accepted Spanish "Peaces of Eight" coin. It was Thomas Jefferson that was the driving force behind the decision to use Silver as our money. This should not be surprising as it was Jefferson who famously stated...
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
Unfortunately, this statement spoken over 200 years ago is looking more and more like a genuine PROPHESY.
Yes, the Founding Fathers LOVED SILVER!
THE CHINESE LOVE SILVER
The Chinese have used Silver as money going all the way back to the early 1400's although it was not always a government sanctioned currency. It wasn't until 1793, in the Qing Dynasty, that Silver coinage really began to take hold. A trade dispute with the British sparked the Chinese to only accept Silver in trade with the British Monarchy. Thus began the British banking establishments long running war against monetary Silver as they have tried to "demonetize" it as a form of currency for over 200 years. In 1935 the Chinese could no longer withstand the British monetary attacks and declared it illegal for Chinese citizens to own silver.
Recently, the Chinese Government has removed almost all of the restrictions on private ownership of gold and silver and have been actively promoting the purchase of precious metals to its people. This is clearly a strategy to put pressure on the Western Governments who continue to steer their populations away from precious metals in support of their fiat currencies.
Today, almost ALL freshly mined silver concentrate passes through China in some form or another as China has a virtual monopoly on the smelting and fabrication of raw Silver. For years the Chinese smelting operations have offered much better terms (upfront cash, higher prices for ore) than other smelting operations around the world which has consequently closed smelting operations around the world leaving China the only game in town for silver miners. With the majority of electronics manufacturing located in China it is very convenient to have such easy access to newly mined silver.
Yes, the Chinese LOVE SILVER!
MANUFACTURERS LOVE SILVER
Although Silver has been a monetary metal for thousands of years, since the end of WWII silver has developed into a VERY important industrial metal. The cause of this has been decades of LOW SILVER PRICES due to the demonetization of 50 Billion oz of physical silver that were once used as coinage around the world. Thousands of new electronic devices were made possible by the extraordinary conductive properties of silver and the world has greatly benefited from these inventions. Silver is so important to our future technologies that it is the metal most cited in all new US patent applications.
As such, the list of industrial uses for silver is getting VERY LONG including cell phones, flat screen TV's, computers, solar technology, smart bombs, batteries, catalysts, medical applications, water purification, jet engines and the list goes on and on. The kicker is that all these applications use silver in very small amounts which means a large increase in price would not necessarily slow down Silver demand and consumption. It also means that any large scale recycling operations (other than photography) is not likely at any price. That silver is GONE and industrial users must continue to source Silver from new metal coming out of the ground.
Yes, manufacturers LOVE SILVER!
ENVIRONMENTALIST LOVE SILVER
The burning of "fossil fuels" continues to be one of the most hated ways to produce energy. Whether or not you believe in global warming, the byproducts produced from the burning of oil and gas are very dangerous to all living things on the planet. Be it air pollution, water pollution, global warming, geopolitical conflict or any of the other bad consequences it is time for a change. Environmentalists are jumping up and down these days about clean solar energy and they have a lot of pull in with grassroots activists in our society.
Solar energy is coming into its own as a solution to the fossil fuel dilemma and Silver continues to play an increasingly important role. Not only are solar energy manufacturers incorporating more and more silver into their technologies, due to the unmatchable conductive properties of Silver they are also incorporating silver into transmission lines, power conversion stations and control mechanisms. Silver will play an ever increasing part of the solution to fossil fuel issues.
Yes, environmentalists LOVE SILVER!
THE MILITARY LOVES SILVER
One of the closest held secrets in the Silver market is exactly how much physical Silver is used by the military every year. Estimates have been made in the range of 10M oz to 400M oz but nobody has any reliable data to base these assumptions on...until now! May I present to you a report by the Comptroller General of the United States of America written in January of 1982 that shows just how important and in what quantities Silver has been used by the US Military:
National Defense-Related Silver Needs Should Be Reevaluated And Alternative Disposal Methods Explored
Although this report was originally classified it has since been released on the GAO website. This report has a treasure trove of information previously thought to have been considered "conspiratorial" to the mainstream Silver markets. Basic facts outlined in this report include:
- Physical Silver is vital part of the US National Defense policy, and the US is highly dependent upon foreign supplies of silver for military purposes.
- FEMA is the organization within the US Government which in charge of the official Silver programs and has long desired the dumping of all strategic stockpiles of silver(which was supposedly accomplished in 2002).
- In 1982 FEMA estimated 51M oz of silver per year would be necessary in wartime but the GAO claimed that figure was grossly underestimated.
- In wartime strategy Silver was considered as a potential "medium of payment to foreign troops and workers in areas of the world where there may be little confidence in paper currency".
- "The US provided almost 441 Million troy ounces of Silver to allied and friendly countries during World War II under the lend-lease program."
There is much more in this report but think of the implications of what is discussed. In 1982, even prior to the mass introduction of electronics in warfare, the United States estimated it would use 51M oz of silver in military applications per year in times of war. Today with smart bombs, electronic guidance systems, high tech infantry equipment and hundreds of new applications it seems obvious that silver utilization in military applications have increase in multiples of the 1982 estimate of 51M oz.
Considering the US Defense Budget has grown from around $200B in 1982 to an estimate $1T in 2010 you can bet there has been a sizable increase in Military Silver consumption. Possibly 500% considering all the new electronic military applications. Understanding that the US Defense Spending represents only 40% of the global defense spending you can multiply this silver consumption by another 250%. Call me crazy but this quantity of Silver used in military applications seems to be pointing to the HIGH END of the estimated range if you ask me.
Yes, the military LOVES SILVER!
HONEST GOVERNMENTS LOVE SILVER
Let's face it...fiat money is a failed concept. It has failed thousands of times over the course of history and it will fail on a GLOBAL LEVEL this time as the entire world has bought into the fiat monetary basis.
History is replete with examples of great societies that have flourished due to a SOUND monetary system and were then destroyed by monetary abuse. The Roman empire is a great example. As the longest surviving of all civilized societies, the Roman Empire reigned for thousands of years by using pure gold, silver and bronze coins as money. It wasn't until they began serious "coin clipping" (diluting the purity of coins) to artificially increase the money supply that the empire was destroyed.
The United States will be the next great example of this phenomenon. From the very beginning of our great nation until the establishment of the Federal Reserve there was virtually no inflation or deflation as Gold and Silver were used as our money. Since the establishment of the Fed in 1913 and the virtual abandonment of metal used as our currency the purchasing power of the US Dollar has dropped 98% and we now stand at the edge of total monetary destruction.
When the final monetary blows come down and all fiat and electronic wealth are swept out to sea the People of the United States will DEMAND a return to our Constitutional Gold and Silver money. It is the basis of our Republic and there are plans to return us to our Constitutional monetary system already in the works.(see: Hidden Meanings In The New $100 Bill http://www.roadtoroota.com/public/261.cfm)
Yes, honest governments LOVE SILVER!
WOMEN LOVE SILVER
There is something special about gold and silver. When you give a gift of gold or silver jewelry to a woman you can see it in her eyes that she understands that it represents more than just metal. Jewelry can represent love and trust and caring and beauty. In India, the largest buyer of gold and silver jewelry, it represents much more. It is a gift of wealth. A dowry to a new bride, a gift of luck during religious celebrations and even used to ward off evil spirits.
Interestingly, the recent high price of gold has turned many buyers away from gold jewelry and towards the next best thing...SILVER! A prospective buyer who struggles to buy a single gold necklace can easily afford a much larger and heavier Silver necklace. High prices in gold have and will continue to drive silver jewelry demand much higher.
Yes, women LOVE SILVER!
MINERS LOVE SILVER
It seems like it would be an obvious statement that miners of a certain metal would look upon their products very favorably but over the years executives at mining companies have been very hesitant to fight for free markets in Silver. Since the introduction of gold and silver leasing in the late 1980's many of the large mining companies have actually bet AGAINST their own product by using Bullion Bank hedging strategies. Barrick is the best example as they were the largest hedger of both gold and silver throughout the 1990's making huge money off the strategy. Sadly, once the gold and silver bear markets turned into RAGING BULL MARKETS companies like Barrick lost BILLIONS trying desperately to close out their underwater hedge books.
But today is much different. Although it was a painful process almost all miners now have a clean hedge book and the future is looking very, very bright. Mining a commodity is a great business in the boom times. As your costs are relatively fixed, every dollar your commodity rises above your extraction costs is PURE PROFIT. In the good times gold and silver mining companies are more like MONEY PRINTING MACHINES.
Yes, miners LOVER SILVER!
INVESTORS LOVE SILVER
There is an old adage in gold investing that goes something like this..."Don't wait to buy Gold, buy Gold and wait!" This saying rings just as true for Silver if not more. The Silver bull market began in to get serious in January 2004 when Silver finally broke free of the $5 price collar that had been strangling investment interest for years.
Since 2004 Silver investors have been on a VERY wild ride with swings up to $21 then slams down below $10. Rapid jumps and rapid crashes are the name of the game in Silver (which one may find interesting considering the official supply/demand dynamics are one of the most stable in the commodity sector.) For years people have told me Silver was "In a Bubble" and every time the rug was pulled out from under the price I heard cries of "I told you so!" This has been true at $10, $15, $20 and $25. I have no doubt I will hear the same thing at $30, $50, $100 on past $500 in the coming months/years.
But those who have invested in Silver have had the last laugh and will continue to laugh as the price continues to rise. Over the past 10 years the bullish reasons for investing in silver have only INCREASED and will continue to increase until every one of those people who say that Silver is "In a Bubble" turn into reckless buyers. Then, and only then, will I consider trading my Silver for something else that has also has been neglected, denigrated and is massively undervalued. Smart Silver investors will continue to ride Santa's Silver Sleigh..."LAUGHING ALL THE WAY!"
Yes, investors LOVE SILVER!
INVENTORS & SCIENTISTS LOVE SILVER
A little known but very interesting fact is that Silver is mentioned in more new US Patents than any other metal. Of course this is due to all the wonderful physical properties that silver has but it also may be due to the fact that it is incredibly cheap considering it's physical properties and global scarcity. Inventors around the world are using Silver in electronics, power generation, medical, antibiotics, clothing and even bioengineering. Every day we are discovering new and amazing uses for Silver...it's truly a "Wonder Metal".
Although it is no longer a secret, the biggest and most important scientific discovery in the history of mankind was made possible due to a 470M oz transfer of Silver out of the US Treasury and molded into the Silver magnets used in the Manhattan Project. During WWII, in order for the scientists to enrich enough Uranium for the A-bomb they had to make the largest electro magnet ever built called a Calutron. The story goes that since copper was in short supply they had to secretly borrow the Silver from the US Treasury. Considering Silver is a much better conductor of electricity, it is likely the copper angle was just a cover story. That Silver likely stayed in production of enriched Uranium until the Calutrons were finally shut down in the early 1990s. So it turned out that Silver was a key part in the production of the very first atomic bomb...and played a key role, for better or worse, in changing our world forever.
Yes, inventors and scientists LOVE SILVER!
PRESIDENT JOHN F. KENNEDY LOVED SILVER
On June 4, 1963 U.S. President John F. Kennedy issued Executive Order 11110 which delegated to the Secretary of the Treasury the president's authority to issue silver certificates under the Thomas Amendment of the Agricultural Adjustment Act. The wording of this Order was: "issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of an outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption"
In essence Kennedy was trying to circumvent the Federal Reserve monopoly on printing our money and tried to reinstate a truly debt free currency that would directly compete with the debt based fiat money.
On November 22, 1963, barely 6 months after signing this Presidential Order, President John F. Kennedy was assassinated in Dallas, TX and Vice President Lyndon B. Johnson never followed through with Kennedy's Presidential Order. In 1965 then President Johnson signed a bill to end all Silver coinage in the United States and thus JFK's dream of an open and honest US currency died with him.
Yes, President John F. Kennedy LOVED SILVER!
JP MORGAN REALLY LOVES SILVER
I know all about the rumors of JP Morgan's involvement in Silver manipulation. Most Silver investors can see every day that the silver price is, at a minimum, controlled by a trader or group of traders but I'd like to point out that JP Morgan is in "the game" to win and not to lose.
Let's look at all the ways that JP Morgan can "win" with their Silver involvement. First, there is the estimated 150M oz COMEX short position. What I hear from Bart Chilton is that JP Morgan claims this position is merely a hedge of other long positions they control. This may be a fact but owning and trading on that gigantic position is like letting a bull loose in a China shop. They have the power to swing the price of silver any way that profits them. According to the US Office of Comptroller of Currencies, JP Morgan has Notional Derivative Contracts valued at $8.4B of "other precious metals" (mostly silver) I'd say their 150Moz COMEX Silver short position, worth only $4.2B today, isn't where their biggest Silver bets are held. As I said before...JP Morgan is in the Silver game to WIN.
Having said that their involvement as "Custodian" in the iShares Silver Trust leaves me scratching my head. Why would a bank who is in the Silver game to win be fool enough to GUARANTEE up to 500M ounces of physical silver when they are only getting paid a relatively tiny sum for taking on such a gigantic responsibility? The Sponsor of the Trust, BlackRock, makes less than $20M in annual fees from iShares Silver and JP Morgan's fees are paid by the Sponsor. Let's just say that JP Morgan gets 1/2 of these fees. JP Morgan would only get $10M per year for a $9B+ responsibility/liability. That sure doesn't sound like a good deal to me...unless there is more to this arrangement than is told to SLV Investors...(wink, wink)
Let's face it. The purpose of a publicly traded bank is first and foremost to MAKE MONEY. I don't believe for one second that JP Morgan agreed to be the Custodian of over 300M oz of physical Silver for a mere $10M/year or that they hold their over sized Silver short position to lose money. Common sense tells us that the large concentrated COMEX short position continues to suppress the price of COMEX Silver but it may also serve a more vital purpose to JP Morgan and that is to protect the entire fiat monetary system.
Let's face it, JP Morgan gains much more value by using (or abusing)the fiat monetary system than they can ever gain from their Silver strategy. You see Silver, as a monetary metal, is the DESTROYER of fiat money...the money of Bankers. Silver is in the process of reclaiming its rightful position as a MONETARY METAL and JP Morgan (and friends) are trying to stop this from happening. A few Billion dollar loss in silver trades is NOTHING compared to their 100's of TRILLIONS that would be lost if Silver were to trade at it's true fair market monetary value...whatever that may be. Unfortunately, the control of the prices of both Gold AND SILVER is essential in any paper/electronic fiat monetary system.
Yes, JP Morgan LOVES SILVER!
I LOVE SILVER TOO
I admit it freely...I AM A SILVER BUG! Like most Silver Bugs, I started out as a Gold Bug, gained a full understanding of why gold is valuable and then applied that understanding to Silver and discovered there are VAST difference between the two metals. Don't get me wrong, Gold is a great investment but Silver has all the exact same supporting attributes as Gold BUT ALSO has vastly more bullish drivers than gold ever will. I've written many, many articles on the reasons to buy as much physical Silver as you can carry home. Here are only a couple of them for you to sink your teeth into:
Melt The Witch
$6,000 Silver and ONE BANK
Silver Manipulation Quiz
For those of you new to the Silver Story I highly recommend you HURRY UP and do the necessary research to understand what is driving the price of Silver higher and higher because there is very little time left to take a REAL position in investment silver before it the SILVER ROCKETS take off. Understanding and acting upon the Silver investment story has the ability to CHANGE YOUR FUTURE. Waste no time because time is NOW.
Yes, I LOVE SILVER TOO!
Hopefully, the above examples of people who LOVE SILVER will help you LOVE SILVER TOO. Truthfully, it has been fairly difficult for me to write this article because in the past I have tended to focus on all the "conspiratorial" reasons to buy silver and left all the mainstream analysis to the myriad of other Silver analysts. As I explored each of the topics above I had to hold myself back from "going down the rabbit hole" of Silver Conspiracy Theories like I usually do in my analysis.
For those of you who, like myself, enjoy a good conspiracy story with ample supporting arguments I invite you to check out my website and sign up for free updates to the Road to Roota Letters (www.RoadtoRoota.com)
For those of you who wish to stick with the mainstream Silver analysis I think there is enough "non conspiratorial" facts for you to begin to LOVE SILVER TOO!
May the Road you choose be the Right Road!
-- Posted 1 December, 2010 | | Discuss This Article - Comments: