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Silver dipped below $36/oz. this morning, down about 8% from yesterday, and down about 27% from
the high last week of
about $49.50/ per troy ounce.
(A Troy oz. is about 10% heavier
than a the more common
international avoirdupois ounce.)
Some people are saying
"this is like 1980 all over again"
and that silver will now crash. Nothing could be further than
the truth.
The truth
is that the amount of money they have printed up since 1980 is ten times higher, so if you adjust for inflation, the peak price from
1980 should be more like $500/oz. in today's
dollars.
The next
key difference is that in
1980, interest rates, the amount
paid on bonds, rose to over 20% per year. Today, interest rates are close to zero.
Interest rates make
holding bonds more attractive.
The next
thing is that the US government money
printing driven inflation is
just beginning, it's not remotely close to ending. The US annual
budget is about $3.8 trillion, and the government collects about $2.2
trillion, leaving a gap of
about $1.6 trillion that is
met by money printing, which makes
the value of the dollar go down. (http://tinyurl.com/3ozdljx
(April 7th news item))
$1.6 trillion of new money can also expressed
as $1600 billion, or $1,600,000 million.
For comparison's
sake, new investment demand for physical silver last year was only 250 million ounces, at, let's
say an average of
$35/oz., was just under $9 billion, or only $9000
million.
Silver is not in a bubble in terms of prices.
The bubble
in stocks in 1929 was caused by debt financing.
The bubble
in housing in 2007 was caused by debt financing.
You cannot
borrow money to buy silver. Thus, silver is NOT in a bubble.
Exceptions: Yes, you can
borrow money to speculate
in silver, but no silver is ever purchased
at the time that you purchase futures, or
options on silver. And the futures market is known
for having an overall
open interest of over 800 million oz. of silver, while less than 40 million oz. of silver are available for delivery!
Yes, also
certain private firms, who have horrible reputations
in my opinion, will let you borrow money "to buy silver", but you must keep the silver with them,
and it's doubtful that they ever
actually purchase the
real silver either.
In silver's
case, the availability of debt,
and use of leverage is used to prevent you, distract you, dissuade you, from actually buying silver. This makes silver an "anti-bubble"; the opposite of a bubble.
This article claims that silver was
worth about $1218/oz. in the Ancient
Roman World!
http://networkedblogs.com/hojgP
One article last week noted that
"8 years of global Silver
supply changed hands last
week". He could
not calculate how much silver traded hands in the OTC
or "over the counter" markets
that are unreported and unregulated, which are typically 20 times larger than the visible markets like the COMEX and the ETFs.
That article shows that the amount of paper trading of silver has recently grown to perhaps 1000 times larger than the real silver market.
At last week's
rate of about one year of global silver supply traded in a day, with 250 trading days in a year, suggests 250 times as much paper silver trading than real silver, but that's not counting the much larger OTC markets.
Again, with all
the flurry of news articles on silver
this last month, nobody has mentioned the BIS
report that I've highlighted for the past 1-2 years that shows that world banks have liabilities (that's debts) in "other precious metals" (mostly silver) of anywhere from $100 to $200
billion, and that was way back when silver was $20/oz. That's about 15 years of annual world production, with
swings into and out of the banking
system of 8 years of annual
production in less than 6
months.
Thus, mostly all
of the silver in all major LBMA banks
in the world is thus likely fake silver,
all fraudulent paper silver, nothing is real there. I would love to know how much
real silver they do have,
as obviously, they have
to have at least some silver to function with their "fractional reserve silver banking" that they do.
Thus if a bank holds your silver,
I'm 99% certain that they don't physically
hold YOUR silver for you, and that you know nothing about the real
fundamentals of the silver
market.
When you read that an commentator or analyst is "long SLV" you can know for certain that that commentator knows almost nothing about the silver market.
When debt is used to actually
buy real silver, the
extra buying would artificially push the price up.
When banks actually owe silver that they
neglected to actually purchase, their lack of buying artificially pushes the price down.
Again, silver is the opposite of a bubble.
People have not yet learned that
silver is payment in full. Silver is not a promise to be paid. Owning a promise to
be paid in silver is about as bad as owning paper dollars -- the value of both
of which has (primarily
and fundamentally) only
one way to go, which is down.
Government is in a bubble. US paper money is in a bubble. The US
bond market remains in a bubble.
Somebody just posted to my facebook, "everybody is selling out", "Soros is selling
his gold", etc.
No, the opposite is true. Nobody was ever
in.
The real fundamentals
of silver show that less than 6% of 1% of paper money in the USA even bought any real silver last year.
That means
that silver buying would have to be 20 times more, just to get to about 1% of people buying
silver!
Silver the opposite of a bubble.
This dip will be brief. Silver at $200/oz. is still a "price dip" compared to where the silver price is headed.
Jason Hommel
Silver Stock
Report
I strongly advise you
to take possession of real gold and silver, at anywhere near
today's price, while you still can. The fundamentals
indicate rising prices for decades to come.
Follow me on facebook!
http://www.facebook.com/jason.hommel
Or Youtube!
http://www.youtube.com/user/bibleprophesy
JH MINT & Coin Shop, Grass Valley, CA
Minimum order $5000, USA shipping only.
Open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends and bank
holidays. (Also Closed from Dec. 25th to Jan 1st)
www.jhmint.com
(530) 273-8175
Kerri handles internet phone orders:
kerri.jhmint@yahoo.com
(530) 273-8822
If we can't fill your
needs, or if our phone lines are too busy, try my mom's shop, located in
Sacramento, CA:
www.momssilvershop.com
(916) 481-5656
mom@momssilvershop.com
You can also buy and
sell silver at auction, online, for only a 1% fee, at:
www.oneoverspot.com
In Portland, Oregon, a new bullion shop opens up, and needs customers!
http://www.goldsilversupply.com/
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