-- Posted 14 April, 2004 | | Source: SilverSeek.com
Alan Lunt
Contributor, Tactical Investor
It appears that the last article by Sol and myself hit a nerve centre. I used the analogy of a bank and the fractional reserve banking system. I used that analogy because in the first instance silver is money, and in the second instance banks control money. When it comes to the banking system the Central Bank always stands ready with funds to support a distressed financial institution. In general it is financial institutions that are short silver big time, so in reality the Central Bank can come to their assistance at any time with fresh funds. They can keep this situation going figuratively forever. But there is one problem, and that is that silver is the type of money that cannot be depreciated forever.
Every time the Central Bank prints up new money it depreciates the existing stockpile. That is inflation; more money chasing the same number of goods causes the price to rise. Silver has just woken from its slumber and the more the Central bankers print, the more the price of Silver will rise. Compound that with the deficit in physical silver and the price could be explosive. What the investor in silver and gold recognises is that it is their money that is being depreciated and they want protection from inflation as well as an investment that is secure and with a return.
Remember it is the owners of the Federal Reserve who are short silver, the bullion banks. So all they need to do is get on the phone to easy Al and rustle up some cash whenever they need it. The point of no return comes when everyone says "do not steal any more of my savings", and that is a way off yet. With ownership of the Fed the owners have unlimited access to fiat money, for them the Fed is a tree that blooms 365 days a year. That is what the buyers of bullion are fighting.
In the scheme of things silver is very small, but the controllers of money cannot let silver win over their brand of currency. This battle on the Comex has more ramifications for fiat money than meets the eye. Silver and gold is the enemy of fiat paper so we can expect a "fight to the death" by the shorts as they try every trick in the book to control bullion. They will increase margin requirements again, they will force settlements in fiat cash, they may require a certification by the longs, they may deem silver to be strategic and enforce delivery channels, they could be arrogant enough to try confiscation again either the bullion or the mines. However none of these ploys will work long term, not once in history have dictatorial edicts lasted. People have always found a way to circumvent the process, and as hard as they might try they will never control the Eastern psyche.
Remember, each time Central Bank prints money they are stealing off you. It is just the same as coming along with a pair of scissors and slicing a percentage off every greenback you own, every year, year after year. It is like saying a troy ounce will now be defined 2.5 grams instead of 32.15 grams. How many times will Joe Public allow himself to be ripped off? There is an endgame; it is just not here yet.
For silver to reach it's true 1900AD one dollar value in terms of spending power it must attain a $125 an ounce value today, that is what the Central Banks are trying to hide. Their very existence is based on credibility and their inflationist and socialist policies will be exposed when silver and gold finally break free of the Comex. It could be just one person with political motivations, using no margin, who causes a default through loudly demanding delivery. A number of such people spring to mind.
I agree whole-heartedly with Jason Hommel, silver in your possession is the best weapon we have.
History is being written right now; don't forget to buy the book in 10 years time.
© 2004 Alan Lunt
www.tacticalinvestor.com
Email
Silver is standing Tall
Sol Palha
Tactical Investor
I am going to keep my comments short and sweet. Towards the middle of last year we became extremely bullish on Silver, so much so that we stated it would out perform Gold. Now when I look at the ultra long term trend, the answers are obvious, it’s not Gold that is going to be in the spot light but Silver the poor mans Gold and the Ultimate contrarian investment. Any major pull back should be viewed as a time to load up on this extremely beneficial metal. Not only is it a currency, but is used in several industrial applications where it has no substitute, and it is now being used more and more in the health sector. There will be a day when people look back at say, vow was Silver really that cheap. Already the 4.50-5.00 ranges, which we held for what seems like an eternity, seem completely unreal now.
For those of you who have written asking what is different this time around from the time when the hunt brothers tried to corner the market? Well the answer is right there; what did they try to do? They tried to corner the market. Anyone who tries to corner any market usually find themselves in a corner and torn to pieces as the real predators descend on them.. Secondly the US was not out of Silver as it is now, it has now more reserves. Thirdly both the Chinese and Indian consumers are slowly but surely seeing their income rise due to the rapid expansion of their economies. This trend is not going to end any time soon. Both these countries simply love Silver. Goldman Sachs estimates that by 2010 India’s’ GDP could surpass that of China. Indians have always been one of the biggest buyers of Silver and if their economy keeps improving the way it is, they could technically make up for any slack in the demand due to slowing economic conditions in the western world. Fourthly there is a World outside the US; Silvers price is not dependent only on the economic fortunes of this Country. Finally the major long-term trend has finally turned and it’s pointing up. Long-term trends do not just change overnight.
www.chartbook.com
One look at the above chart shows you how Silver has been building an explosive channel formation for years and finally broke out it like a firecracker. Some sort of consolidation is only normal but would provide a great opportunity to add to ones position. However as the saying goes timing is everything, perhaps we could help in this area. Short and Simple, Silver is going to be the ugly duckling that turned into a beautiful swan.
© 2004 Sol Palha
Tactical Investor
Email
-- Posted 14 April, 2004 | |
