Trying to understand silver

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zoneblue's picture
zoneblue
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Joined: Nov 23 2008
Posts: 6
Trying to understand silver

Ive followed this site for a year or so, but just starting to really understand many of the issues more recently.

I have a question regarding silver. We watched a couple of videos made by NIA, which rather left me with an impression that they were almost trying to create a silver bubble. Subquestions:

a) if silver is a more industrial metal in terms of its primary use, and given silvers rise and fall during the "recession" what is to say that the value of silver wont plummet when the SHTF, out of reducing industrial demand.

b) can anyone explain more about what NIA says about JP morgans short silver position. I only have a vague understanding of what a short is, so if anyone can explain in simple terms how that works thatd be fantastic.

 

 

Poet's picture
Poet
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Joined: Jan 21 2009
Posts: 1892
There Are A Few Threads On The Subject Of Silver

There are some previous threads that may be helpful. One of them. with many comments, is linked to below:

When To Buy Silver
http://www.peakprosperity.com/forum/when-buy-silver/50619

In that thread, I personally wrote the following:

Poet wrote:

Think of yourself as a farmer.

You just harvested some grain. You gotta preserve some for the future - for seed corn and to live on (i.e. to eat or to buy things with it). You also know that no matter how you store it, you will lose some to rot, insects, rats, etc..

You could lose as much a 50% or more of what you save to rot or vermin. Or the price of the corn could fall drastically in the future. But you store anyway, because to not save any at all - based on the future hope that you'll be able to trade your labor for enough grain to live on - is a bad, bad idea.

That said, my current focus is doing what I can do with limited resources in regards to the "What Should I Do?" articles. Food storage, for example, comes before silver or gold.

Poet

badScooter's picture
badScooter
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Posts: 152
NIA and silver

Hi ZoneBlue, there is a bit of contention within the silver space as to whether it is manipulated or not (and/or to what degree)  CPM's Jeff Christian will tell you it absolutely isn't, GATA's Bill Murphy will tell you (at great length) that it is, and Morgan Report's Dave Morgan will tell you "It is manipulated in the short term" by the big players but contends that the overall secular trend is beyond the feasible scope of a manipulation...i.e., the trend is too big to force.  I tend to subscribe to the Morgan view, because it is very easy to see how silver (and other commodities) are routinely fiddled with.

Example:  Over the course of just a week or two this spring, the margin requirements (down payment, if you will) on silver futures contracts was raised a staggering five times by the governing body (CME).  Oil and ag margins were also raised.  TPTB do *not* want the QE money flowing into commodities (overtones of "hoarding") they want it flowing into equities.  During the same time period they were jacking commodities margins through the roof, they were lowering margin requirements on equities, i.e., making it easier to invest yer bucks in stocks.  These are examples of short term manipulations...remember the CME is doing this to try and prevent a speculative hot-money blowoff, so even if you disagree with what they are doing, it is not necessarily true they are evil bastards.

As far as industrial uses go, silver is *everywhere*, and in most cases it is not recyclable.  Examples include printed circuit board coatings and electronic components (my current forte), medicine, and as textile treatments (kills bacteria).  So, for a percentage of silver consumption, it is effectively gone forever.  The demand is relatively inelastic as well; i.e., if you make sweatsocks and your silver cost doubles from $.01 to $.02 per sock, you're still a going concern and you keep buying silver.

Silver is unique in that it is also a monetary metal, and a lot of the price building trend is based on that (my opinion).  Because of this, even when/if everything in the economy tanks, there will still be a role for silver as a means of exchange and as a store of value (so-called "poor man's gold).

I think NIA is a bit over-the-top in a "Jaws" sort of way, but I can't argue with them, in that there are indeed sharks about.

Hope this helps?

Mike

zoneblue's picture
zoneblue
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Posts: 6
The russian woman

@poet , reading through that thread, im more like the OP, in that im more concerned about having PMs than when i got them. I also noticed post#101143 by an russian woman, who said that PMs were worthless during the USSR fall. AFAIK argintinian Ferval says something similar. My question is still are all of those preparing  being made into a bubble market for silver. It might be the natural state of any man to want to protect their wealth, but maybe its just not possible.

[url=http://www.peakprosperity.com/comment/101143#comment-101143]

@badscooter , Looking at some of those here certainly are quite a few people saying silver is going to fly. My problem is im not a gambling man, and pretty much decided 6 weeks of cash , 6 months of silver and the rest into useful things we were planning on buying sometime anyway.

 

Aaron M's picture
Aaron M
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Joined: Oct 22 2008
Posts: 2373
ZoneBlue
Quote:

I also noticed post#101143 by an russian woman, who said that PMs were worthless during the USSR fall. AFAIK argintinian Ferval says something similar. My question is still are all of those preparing  being made into a bubble market for silver. It might be the natural state of any man to want to protect their wealth, but maybe its just not possible.

I'm not sure about the Russka, but FerFAL has stated over and over again that any precious metals quickly became acceptable mediums of exchange; jewelry, coins and so forth. I've heard similar stories from folks who traded goods during the collapse of the USSR - gold rings for bicycle tires or insulated pipes. Anecdotal, but interesting to think about.

As far as buying silver, my main thought is it will not (in my lifetime) be worth "nothing".
Dollars? Can't say I feel the same way.

Cheers,

Aaron

tomadkins's picture
tomadkins
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Joined: Sep 9 2009
Posts: 33
silver thoughts

I have some silver.  Yes, it was demonitized in the 1800's.  However, all of this paper fiat (dollar standard) that started 8.15.1971 is coming to a head. 

The only true value is a bi-metallic system (i.e. silver and gold).

But your question was:  should I purchase some silver?

I like junk silver.  The older US coins (pre 1965).  A couple of comments.  90% is the preferred by me for several reasons:

1) it is the cheapest form of silver to purchase (ounce for ounce),

2) it is US money now,

3) it is accepted at face around the world without assay,

4) it is fractionable.

I am NOT into numismatics.  I don't care about the rarity of the coin (a coin comes from a gov't mint...a "round" comes from a private mint).  I am into ounces.  People will pay a premium for a rare coin.  In time...ALL premium will disappear.  Meaning:  you shoulda/coulda/woulda purchased more OUNCES if you go for the cheapest VS something else (silver eagles, for example).

It is money now.  That may be a big deal in the near future.  For example: in the 2008 period...90% ramped up to a 50% premium over other forms of silver.  Why?  Because there was (imo) the perceived crisis of currency...a seizing of credit, if you please.  This premium eased off from the October high to very low...in May of 2009.  Translation:  I bought 1000 oz Comex bars in October 2008 and then swapped them for 90% silver in May.  If I had purchased 90% in October....I would gotten MUCH less total ounces than I did with my swap in May. 

Accepted:  you do not have to go to a refiner to verify the content of your holdings.  When TSHTF...the refiners will purchase about 2 months of process inventory.  After that...they will discount everything.  Meaning, they really don't want/need your silver...so they will give you maybe 30% + LESS than spot.  They are already out of pocket for the 2 months of inventory they are holding.  They don't want your product.  They offer/pay less.

It takes 14 dimes to make an ounce.  I saw where someone was selling gasoline in the USA for $.20/gal...payable in 90% silver. 

The coming financial predicament is going to be centered around a CONFIDENCE of currency crisis.  People will (may) go back into the perceived (historical) safe house (USD)...but that charade is fading fast.  That is when people, enmasse, will head for tangible, fungible, physical assets...e.g. silver/gold.

At that time, there will be a CERTAIN delay in receiving physical...because the demand is going to skyrocket.   And the price too.  And that becomes a vortex like we cannot fathom.  I haven't experienced it...and I do NOT have warm and fuzzy feelings about it...because the fallout from the "everyman" is going to be visceral/tangible/violent.  When folks see the purchasing power of their money shrink...on a massive scale...they are going to be scared/mad/motivated.

Now, I have some theories about JPM.  First of all...I think they are the largest SH of the US Fed.  That said, they are also a bullion bank.  This is my contention about their silver shorts.  They have silver on storage (somewhere).  They charge rent on this bullion.  They ain't totally stupid.  They then "sell' this silver to other people.  There is always a FLOAT going in/out of their inventory.  They are resting on the concept that they can receive the rents for storage from many people for the same Comex bar.  It has been said that they have sold the same inventory to maybe 100 people.  Think about that.  OK, they are smart and cunning.  They are relying on their ability to deliver if you want your bar.  But most people do NOT want to hold them.  They are clumsy, heavy, and generally a PITA. 

So, where does the shorting come in?  Well, here is where they utilize their ties to the FED.  IF the price of silver goes up...they run the risk of people wanting to sell their silver and get out.  JPM doesn't really care too much about this...because they can get some assistance from the FED (this is all conjecture on my part).  And just to help suppress the price of silver...JPM purchases "short" contracts (vs long ones) in an attempt to manipulate the market sentiment that:  the price of silver is probably going down.

If you trade in the market, you can look on an option chain and see the number of contracts that effectively indicate the overall market feelings on a particular stock/other. 

Well, JPM (and a few others) have purchased MASSIVE amounts of silver shorts...in an attempt to manipulate the market...and suppress the price of silver.  Because...IF the price of silver goes to some magic number...JPM (and their cohorts) will then face a potential devastating demand by the holders of the silver (remember, 100:1) to sell/deliver/other the silver.

So, in an end run, JPM is attempting to keep the price of silver DOWN.

They ain't doing so good.  It will be interesting to observe what happens if the price of silver gets above the price of a share of JPM.  I don't know what will happen.  I'm thinking a titanic moment can't be far away. 

Another confession:  I think most if not all of the institutions involved on any material scale relating to the world financial scene...are ALL corrupt.  They seem to move and bob in sync with each other.  There is NO transparency.  There seems to be complicity to corrupt in every quarter.  It should not surprise you to consider that this entire system is orchestrated in a manner that fosters deceit and deception.  It pains me to think that the institutions that I previously held in esteem...are manipulated and postured to pillage the populace.  We can pray for our nation and the world.

In any event, welcome to the site.  There is so much to learn/assimilate/do.  There are a bunch of insightful people here.  Just keep reading (and doing...).

Regards,

TomA

R.US's picture
R.US
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Joined: Aug 31 2009
Posts: 10
from russia with love

The Food shortage is extremely likely when TSHTF. I know that as a fact from experiencing USSR collapse and I do not see a reason why in US it should be different.

That valuables an ordinary urban American family may offer in exchange for food ?

The massive amount of jewelry and gold bullion from the families' “emergency” funds will start chasing extremely tight food supply.

How match then the gold ring cost? It still valuable but unlikely it buys more then 2 bushels of potatoes.
How match then silver cost? My guess you will be lucky if someone agreed to give you a tuna tin-can.  

After while the situation stabilizes and commerce will rise from the ashes.
That will be a payoff for some who managed keep or even multiply his Gold and Silver stash.

The question is: How long it takes till new economic reality settles?
For Russia’s isolated collapse with help from US, Europe and IMF it was around two years.
Should it take less for US in case of global economic and currency collapse?

My personal opinion: Buy Silver today only if you already covered all preparation steps and have plenty FRN for disposal.

jimjo555's picture
jimjo555
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(No subject)
Travlin's picture
Travlin
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Joined: Apr 15 2010
Posts: 1322
Welcome

Jimjo

Welcome to the forums.  Maybe next time you will have a little more to say!  Cool

Travlin 

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