The Sorrow of the 49er: How Price Manipulation Breaks the Spirits of the Silver Investor
Left: The silver chart during the April-May Drive By Shooting in 2011, commentary provided by T.F. at T.F. Metals Report
The silver market has been battered by the psychological warfare of command-and-control economics. This economic warfare has been psychologically exhausting for the silver investor as silver remains a no-news market with short-term bearish price movements. Over the last year, however, the silver investor has become hardened or acclimated to a market without new buyers or new sellers and little legitimate price action. Instead, they’ve watched as banks colloquially known as “commercial hedgers” bluff a long, long position in physical silver with shorts exceeding three-times the yearly supply at any given time. What’s likely is these banks do not own any a position of physical silver anywhere near this amount.
For the 49er (those who bought silver in the 40s), who entered into the market in March-April of 2011, the price of silver has been a source of discomfort if not inner-turmoil. Retail bullion shops across the country started to provide services outside their previous jurisdiction of bullion slinging, working for several weeks after the May Drive-By Shooting as therapists and counselors. That price action in the Spring of 2011 was such to entice a whole new breed of silver investors – the 49er – into the market, only to subsequently discourage them and break their confidence that, perhaps this once, they made the correct investment decision.
The dictated price of silver since that point last April has been managed in a way to break the spirit of the silver investor of the last $20 (from $30-$50). The price propaganda not only keeps the price of silver low, but also puts psychological restraints on buying demand via jerky moves to the up-and-down side in an overall sideways market. The rulers say to our dear friend the 49er:
“Nope, we are sorry Millenial men and women who rushed to your neighborhood coin shop looking to make the investment of a lifetime. We’re going to gut this market of 25% of its value once that check of yours is cashed, and you’ll be lucky if your husband or wife doesn’t leave you for losing all the money, you fool! After all, what a nice kitchen those couple thousand dollars lost on 1,000 ounces of silver would have built.”
And since that period of sorrow for the 49er, the price action has been blah. Sure, in September the price ran up to just below $40, instilling further false hope that now the run was to begin again. The market was once again obliterated back down to $26, essentially where it began the year – a near 50% loss for our dear friend the 49er.
Sure, everybody understands the price suppression by now – of course the markets, all markets, are rigged– but what I believe fewer understand is the psychological dimension to the manipulation.
Yes, JP Morgan & HSBC, two transnational banks with large silver positions, are hooked on the fiat dope. But, they are not dumb, for they know the worth of this paper is 100% reliant upon its backing by a brainwashed and submissive mankind, and without this it is worthless. The bankstards are not only interested in suppressing the price of silver, but they intend to do so in a way that is traumatizing to the silver investor so as to frighten the potential silver buyer out of buying. This keeps them hooked on and faithful of the dollar. This is price propaganda.
What is propaganda? Propaganda is a form of communication premised on the goal of influencing the attitude of individuals and members of their community on a certain subjects. What the banks are communicating to the silver market is that this is a dangerous investment, with lots of volatility and complicated price discovery. On the flipside, the dollar is a safehaven asset, the world reserve currency, and in our lifetimes it’s always been this way so there’s no reason to suspect a change.
But, the dollar-terms price of silver is, in essence, a lie, for the perception of the silver price, when viewed by many investors, is taken without consideration of a) the price manipulation in the paper markets and b) the constant devaluation of the U.S dollar via “quantitative easing.”
The 49er was, at a couple of points in the last year, down 50% on his or her initial silver investment. For many, this traumatizing investment will be the last time they touch silver. Some were discouraged for a short time, and have since began dollar-cost averaging, but there has not been much to get excited about since in the market. Instead, since then, the market has looked like it did before the beginning of the “bull market” (I use quotes around bull market since this term implies fiat valuation of an asset, a misleading practice) starting at the beginning of last decade. Here is a chart from April 2012 juxtaposed with a chart from March 1999 in order to demonstrate the parallels between recent silver prices and those of 1999-2000.
Total sales for the American Silver Eagle bullion coins in April of 2012 totaled 1,520,000 ounces, down from 2,542,000 ounces in March. Year-to-date sales of the Silver Eagle coins were 11,659,000 ounces, down by 23.5% from total sales of 15,248,000 ounces in the first four months of 2011.Again, the manipulation rampant in the silver market is not there to merely keep the price down, as there is a psychological dynamic as well. The more volatile the market the less likely institutional investors are to begin purchasing silver. Moreover, for the thousands of people who have been buying silver over the last two years, this price range signals to them that perhaps there is not much to be expected out of the market for the near term (six months to a year), and so some liquidate the holdings they had and others sit tight, but do not make any further purchases. We see this in sales figures published by the US Mint.
On the charts, notice the peaks-and-valleys of the last several months. Whenever silver begins to look like it has awoken and makes a 50 cent + move north, it immediately crashes, retracing its gains and then some. The price manipulation in the silver market serves many purposes, one of which of course is to maintain the appearance that the dollar is a safe asset. In terms of the market itself, the price action is determined to convince the silver investor that silver is too volatile to be a safehaven asset, and for he or she who merely glances from time-to-time at the silver market, that silver is in a bubble, and would never make a suitable investment.
Most importantly, you have seen the farm and have decided to leave the farm. You do not want to grow forever dependent upon the fiat dope pushed by our ruling class. Instead, you desire independence and you’ve made steps towards that. You stepped outside the monetary box given us by this violent vector of civilization. You should be happier to have the silver than not. Think about it this way: Without your money in their banks, your savings are no longer going towards the military destruction of foreign occupied terror-tories and the financial destruction of your own country. Now, that’s an investment of a lifetime.But, do not be discouraged my friend the 49er, for you have indeed made the right decision. The way to win big in the precious metals market is to “sit tight and be right.” This is a long-term investment. You are not gambling, but, instead, are capitalizing a long-lasting trend of commodity price rises in terms of paper money.