Archive for January, 2013

It was only several weeks ago that the U.S. Mint announced they were suspending sales of the American Silver Eagles. The reason WASN’T because there was a lack of demand. Instead, the U.S. Mint had NO American Silver Eagles left to sell! In what is still arguably the biggest monetary story in human history, that being the decades (or centuries) long suppression of silver, those paying attention weren’t surprised at the following news. When American Silver Eagles were once again made available to the public on January 7th, the result would be shattered sales records.

American Silver Eagles SoarAmerican silver eagles | American Silver Eagle Sales Record Kicks Off 2013

On January 7th, the U.S. Mint reportedly sold 3,937,000 American Silver Eagle coins. SilverDoctors reports that 6,107,000 American Silver Eagles were sold in ALL of January 2012. So 2/3 worth of last years January sales was accomplished in one day!

American Silver Eagles’ Opening Day 2013 has set the single day record for sales. This years opening day sales were about 23% more than 2012, and 89% more than 2011. Considering the all time monthly sales record was set in January 2011, this presents the very real possibility that January 2013 will be the new record holder. Demand which we have never seen before.

12 year american silver eagles sales chart | American Silver Eagle Sales Record Kicks Off 2013

goldandsilverblog.com

As was written before, the Silver Institute alleges that demand has equaled supply over the last 10 years. If that is indeed the case, will more and more demand put us in a silver default?

Global Supply

2.6 ounces of silver | American Silver Eagles ret record to kick off 2013

2.6 ounces of silver

When something’s price is capped well below it’s natural market worth, the risk of shortages will result. This isn’t some conspiratorial theory, but basic economics. Allegedly, there is still a glut of global silver reserves, liberally estimated to be around 18 billion ounces. But global population growth is still outpacing new production. Put this way, over the last several centuries, and up until recent decades, there has been about 7-10 ounces of silver per person. That is now down to about 2.6 ounces per person. Future cell phones, computers, electronics, eating utensils, jewelry, solar panels, and yes, investment demand, will add stress on the supply. So while this author can’t speak for everybody, I can guarantee that my 2.6 ounce quota will be filled in short order.

Were not going to get into the fool’s game of calling Peak Silver, or start calling price action. The market is still rigged and will continue to be rigged until it CAN NOT be rigged any longer. The U.S. Mint not having silver on hand to meet demand is just a harbinger of things to come. It’s just the tug of war of the real physical supply versus the speculative paper market. Seeing the United States Mint have no silver on hand while silver’s ‘price’ was simultaneously being taken lower has become the new normal.

Back to the Future

In the future, when a computer manufacturer gets the slightest hint of a three week delayed silver shipment, what do you think their action will be? Will they say ‘Oh well, go home employees, we are halting production while our silver is gathered.” Or do you think it is more likely that they will order MORE silver than necessary to ensure steady production? Chances are, they will secure the metal, price be damned. The ‘price’ won’t matter to them because a computer producer halting production of computers is not an option.

See? You can eat it. |  American Silver Eagles sales record kicks off 2013So the question is this. When silver reaches the point in which it’s price isn’t important, but it’s very availability is in question, where would you rather be?  Will you be in the game as one of those who are in possession of the sought after physical metal? Or would you rather stay outside on the sidelines. Playing it safe with excuses like..’Silver is manipulated, awkward, heavy, and what do I do with it. I can’t eat it.’

The three week hiatus of American Silver Eagles resulted in a slingshot of orders when sales resumed. Procinctu is betting that the same scenario will play out on the industrial level in the future. Whether that future is weeks, months, or years from now, we can not know. But we do know that the author will not be found on the sidelines when it does.

Procinctu can not be held responsible for whatever actions you take. Put your wealth in real money like precious metals or monopoly money like federal reserve notes at your own discretion.

Closing out 2012, we wrap up another volatile year for silver. The roller coaster provided it’s highs and lows, but yet again, silver ends the year with a higher price than it started. The trend looks to continue, and there are many signs pointing to silver ending 2013 comfortably higher than it is now. The current setup for Silver is still one of the BIGGEST stories in all of human history. Whether or not it’s end game is realized in 2013, you can still take advantage of it’s unique opportunities. Are you ready for the ride?

real silver | Silver's 2012 Year End Wrap Up | 2013 Forecast

real silver

Once again, the technical and physical fundamentals of silver are both factors to consider. The technical side, like the COMEX (Commodities Exchange) and LBMA (London Bullion Market Association) markets, helps determine silver’s spot price. But to truly ‘own’ the metal, you need to possess it in it’s physical form. Further, any manipulations or unnatural forces in the technical and paper markets, only serve to add stress to the physical (real) supply. So let’s take a look back at 2012 and understand what it means for the future in 2013.

2012 Silver Wrap Up

Using silver ETFs as an example, on December 30, 2011, SLV was trading for $26.94. It closed December 31, 2012, at $29.37 giving it a GAIN of 9.02% for the year. During that time SLV reached as high as $36.44 and as low as $25.34. To put that into perspective, that would be like the DOW fluctuating between 16,500 and 11,500 in 2012. (The DOWs actual 2012 range was between 13,661 and 12,035)

SLV 2012 | Silver's 2012 Year End Wrap Up | 2013 Forecast

Unless you are an experienced ‘paper’ market trader, Procinctu recommends that if you are considering holding your wealth in silver, to do so with a long term view. And do so with the actual physical metal. Silver can make average people rich over time, but if you are looking to ‘get rich quick,’ silver will break you. There are far too many forces involved, leaving it nearly impossible to time the market, unless you are actually one of those manipulating the market.

Year of The Flash Crash

We saw some silver flash crashes in 2012. There are several theories as to why these occur. These sell offs could just be the result of computers setting off a certain trigger in high frequency trading. But many believe it is done on purpose by nefarious banks who are manipulating the market.

JPMorgan is believed to be the king manipulator by the silver conspiracy crowd. COMEX and SLV don’t necessarily represent the true silver market because these trades are made on paper or digitally. Speculation is the main factor, NOT supply and demand. In many cases, actual physical silver is never actually exchanged. Eventually, speculators either maintain their positions or liquidate, but they don’t take possession of the metal. Since the market is so small (relative to other investments), a big bank can come by and flood the market with paper silver, thus driving the price down.

year of the flash crash | silver | Silver's 2012 Year End Wrap Up | 2013 Forecast

Others say that the Chinese are involved in shorting the price. Of course, China has been encouraging its citizens to acquire silver and gold for several years. So with massive short selling, they are able to keep downward pressure on the price. This suppressed price allows for more real physical metal to be bought up.

oasis NOT full of silver | silver | Silver's 2012 Year End Wrap Up | 2013 Forecast

NOT full of silver

Whatever the reason for these flash crashes, one thing we can all agree on is that they are not natural. Fundamentals in physical silver didn’t change from one minute to the next. There is no massive mine that just opened, nor was there an ocean discovery of an Oasis of the Seas sized pirate ship full of silver. Industry is still consuming silver for phones, computers, solar, etc. And people are still stacking physical silver as an investment or fiscal insurance. So what else would prompt a crash?

Silver’s Year End Take Down

Part of the post QE4 take down, the last noticeable crash of the year happened during the second to last week of 2012. To the average person focused on finalizing their Christmas shopping, this would make sense, since ZERO American Silver Eagles were bought from the US Mint. So naturally, when demand drops, so would the price, right? WRONG!! Zero American Silver Eagles were bought, because the U.S. Mint SOLD OUT OF SILVER!!

Pretty cool, huh? That something could simultaneously sell out AND drop in value? With these economic laws, they ought to be giving away Super Bowl tickets. Or with the influx of population and lack of housing, surely the cost of rent and real estate must be next to nothing in the People’s Republic of Washington D.C…. Maybe now we can begin to make sense of the charade otherwise known as the silver market.

ebay silver | Silver's 2012 Year End Wrap Up | 2013 Forecast

The spot price of silver ended 2012 at $30.35. However, if you were to go on ebay and pay the current market value for a Silver American Eagle, you would have to pay $39.56. That’s nearly a 30% price differential!

Anyhow, maybe some were liquidating their paper holdings to close out 2012 for tax purposes. Or maybe it’s one big conspiracy orchestrated so the big banks can cover their short sells. Ed Steer of Casey Research has this to say regarding the covering of shorts:

There were no reported changes in GLD…but it was an entirely different story over at SLV, as 1,257,683 troy ounces of silver were added on Monday.  According to my records…a bit more than 10.5 million ounces of silver have been deposited in the SLV ETF since December 3rd.  Both Ted Butler and myself will be looking forward to the next report from shortsqueeze.com[due around January 10th according to Ted] because we both feel that we’ll see a substantial reduction in SLV’s short position, which currently sits at 18.12 million ounces.

This huge increase in deposits at SLV has flown in the face of an almost four dollar price decline in silver between early December and December 21st…which was the day that 4.8 million ounces of silver was deposited in SLV.  So 6 million of the 10.5 million ounces of silver mentioned in the previous paragraph were deposited on just two days….the 21st and 31st of December.

The speculation of who/why can go on and on, but just being able to understand that it IS happening puts you ahead of most people. So let’s move on to 2013 and why you should consider acquiring silver for yourself.

2013

 

2013 looks to be another good year for silver. But will it be a breakout year? Here are a few factors which may

Ratio

The ratio of silver and gold makes no sense at all, which means it makes perfect sense. The historical price ratio of silver and gold is 16:1. It would take 16 ounces of silver to equal 1 ounce of gold. Currently, that ratio is 55:1 !! In ground ratio is believed to be 10:1. There are about 10 ounces of silver yet to be mined for every 1 ounce of gold. The ratio available for investors is about 3:1. There are 3 ounces of silver available to investors for every 1 ounce of gold. Yet, nearly 50 times more silver than gold is bought by investors in the U.S.!

us mint sales silver | Silver's 2012 Year End Wrap Up | 2013 ForecastWhere will the silver come from? We just saw that the U.S. Mint actually sold out of silver at this rate. Will they sell out of silver in 2013 as well? The ratio is so out of whack right now, it provides a tremendous opportunity as natural law will surely take over in time.

Silver Mining

We can see that exploration is down for silver. Also, the quality of ore grade in the remaining mines is diminishing. Couple that with rising energy cost and any additional government taxes/regulation. What you are left with is an environment that discourages production. With the price so low, it soon may not be worth the cost to bring silver to market. So natural law will invariably take over and force the price higher to make production worth it’s cost.

It was only a month ago that we posted a story from Silver Doctors in which the case for $100 silver was made.

 

COMEX Silver Failure

Over at Goldswitzerland.com was an informative interview with Alasdair Macleod. The following is an exchange concerning silver for 2013. You can read the rest of the interview HERE:

L.S.: Now we come to your expectations for 2013, and let us begin with silver. Would you agree with me that this is the most explosive market there is, not just compared to gold but compared to all other markets?

A.M.: Absolutely. You’ve got the banks’ short position on COMEX which cannot be covered. According to the most recent bank participation reports, the banks are short of nearly 300 million ounces of silver. When you bear in mind this is an industrial metal, the vast bulk of silver consumption from mining and recycling supply goes into biocides, solar panels, electronics, et cetera. You have only 100 million ounces annually left over for investors. The short position for the banks on COMEX is three times that 100 million ounces.

There’s no way this can be covered without a price rise sufficient to kill off significant industrial demand, because there are no strategic reserves to draw on. The only country which might have strategic reserves is China but otherwise there are no reserves. And I think that the only way in which the banks’ shorts could be closed out is after a price hike which would lead to billions of dollars of losses for these banks. There will be a market crisis, and I think that they will have to suspend trading in silver and agree a settlement procedure for long and short contracts. And if that happens, it will be well over $50 an ounce. But remember, other exchanges will continue to price silver if Comex suspends, which will not help Comex resolve the problem if the price continues to rise elsewhere.

Fiscal Cliff

The Fiscal Cliff charade in the United States is just another reason to look to silver. The government is admittedly adding up to 1,500,000,000,000 in debt per year. Yet they make a big deal about saving billions over 10 years? Eventually, it will be impossible to just pay the interest on the debt. The only answers will be hyperinflation or default. The system is already insolvent. As more and more people finally wake-up, more and more will move towards silver. But there is not enough silver to satisfy additional demand.

Playing with Fire

playing with fire | | Silver's 2012 Year End Wrap Up | 2013 ForecastThere is no telling when the flash crash and manipulation game will end. It could be weeks, months, or even years! But when it does end, everyone will finally know silver.

Manipulation has been running rampant for decades, so that is nothing new. It will continue until it can not any longer. As was mentioned before, the suppressed price is allowing for the physical supply to be taken off the market for less than it’s real worth. The result will be a supply squeeze and eventual silver shortage. In a physical shortage, entities holding short positions will get burned. (Though the federal government will probably bail them out.)

The shortage or default can happen many different ways. Industrial users may see one delayed shipment. That would lead them to panic and secure silver at any price just to keep production going. The average person may see the errs of paper monies and move to gold and silver. Maybe they can not afford gold so they look to silver. That influx of investors will add stress which could spark the default. But even if no ‘event’ changes the market, and we only continue on the current suppressed trajectory, silver STILL shows healthy gains year over year.

WWJD?

Since it is the Christmas season, we can take this as an opportunity to honor Jesus. After all, Jesus was betrayed for 30 pieces of SILVER. Judas did not accept payment in Federal Reserve Notes nor Weimar Germany money, he was paid silver. But silver’s significance does not end there. It was referenced numerous times throughout Sacred Scripture. And God’s HATE for ‘unjust weights and measures’ is well documented.

So if one was to emulate Jesus, let’s look at the one noted time Jesus got really angry. It was in the temple when he flipped the tables of the money changers. They were only accepting the coinage of Tyre for commerce in the temple, and thus setting the exchange rate for those who needed the coins. The temple was Wall Street. This really pissed Jesus off. So What Would Jesus Do today? How do you think Jesus would react to our current day paper money schemes? How do you think Jesus would react to the LIBOR interest rate manipulations?

A great way to honor the King of kings is to discard our fiat and unjust currencies and turn to silver. Real money that God created.

 

Conclusion

20 year silver | Silver's 2012 Year End Wrap Up | 2013 Forecast

The 20 year story of silver

 

We aren’t going to come out and say, “silver will be $50 an ounce in May.” No, the market will be manipulated for as long as it can. Weeks, months, or years…..we don’t know. We don’t know when ‘it’ will happen, but we’d much rather be holding physical silver when it does.

Several forecasters have predicted silver to stay on its track and appreciate 30% in 2013. That is a conservative estimate. $40 silver is a good target IF no supply squeeze occurs, no major inflation breaks out, or no calamity is unleashed. But if any one of those things happens, silver would take off and attain it’s rightful place of prominence, next to gold. Will you be along for the ride? Or ‘safe’ on the sidelines with your soon-to-be worthless paper?

All things considered, the case for silver is not only made to ‘profit’ or ‘get rich.’ It’s much more important than that. Silver is the vehicle in which you can attain financial liberty. They can suppress the paper price, but they can’t just print more silver. If you are beholden to a governments’ fiat currency, you are enslaved to them. They can easily steal from you by simply ‘creating’ more money. Don’t be a slave. Look to silver.

the author is long physical silver and physical gold. whether you prefer real time-tested money like silver, or fiat money in the form of paper, it is solely up to you. the author can not be held responsible for your discretions.