Saturday, August 30, 2008

The Terrible Silver Plunge

For all the people like me, who believe silver and gold are real shit, as opposed to fiat currency, the recent plunge in the futures price of silver and gold, was a crime against humanity.. well not really. But this is a prevailing view of many good and smart precious metals analysts. Heck, I don't see it. I think the major banks and nations that are aligned with the U.S. dollar have a very strong interest in not seeing the precious metals soar in price. So, they try to manage the price down. No conspiracy needed other than the usual corrupt shenanigans on Wall Street. Is anything new here?

Silver is still within it's recent uptrend, and may in fact be a spectacular bargain right now.

Silver was driven down very hard and fast by two New York investment banks. Almost certainly JP Morgan was one of them. Shorting silver is one of their lines of business. They probably had help from a variety of self interested parties: central banks, hedge funds. This is how hot commodities go: up and down. However there are repercussions to such savage price manipulation. Silver miners will find it impossible to continue operating. If not forced to shut down, because they'd be running at a loss, they might chooses to inventory their production. Artificially suppressed prices are a guaranteed way to create shortages, and shortages can then persist for some time. Even the arrogant JP Morgan, flush with their vanquishment and consumption of Bear Strearns, knows that they cannot control silver for long. Instead they will reverse their position and ride the precious metals upward, as the dollar renews its own fall into oblivion. If Bernanke is thinking the New York investment bankers are his friend this month for helping drive down commodities and prop up the dollar, he is crazy. Those guys are both ruthless and desperate.

1 comment:

Anonymous said...

what's in your closet - a shoe box full of copper pennies or a stack of paper twenties? a balance of silver and gold coins is a good way to fill up space.