Articles & Blogs - Silver Commentary

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When precious metals commentators (including myself) talk about the pathological fear/hatred which bankers exhibit toward gold and silver, we typically focus on their aversion to higher bullion prices – as being the “canary in the coal mine” which warns us that banker money-printing has spun out of control.

There is, however, an even more fundamental antagonism which the paper-pushing “elites” feel toward precious metals: the simple act of holding bullion is effectively an involuntary “de-leveraging” of the endless $trillions in bankster Ponzi-schemes which have totally contaminated nearly all Western economies.

Readers should not confuse my title with the popular “take down JP Morgan” campaign spearheaded by a few so-called “silver vigilantes”. When I talk about bankers being “blown up” by bullion, this is an entirely passive process. First of all, our purchasing of bullion (as has been often explained) is a defensive move to “insure” our dwindling wealth against the currency-dilution inflicted upon us by the excessive money-printing of the bankers. Secondly, the “harm” caused to the bankers by bullion is indirect, and entirely a function of their own excessive behavior.

Let me quickly cover the first premise by once again reviewing the monetary abomination known as “fractional reserve banking”. In the typical, modern “fractional reserve system”, each time we deposit a (paper) dollar with a bank (or invest it), our eternally greedy bankers are allowed to effectively print-up ten more dollars, loan them out into the economy (or “invest” them) – and thus that $1 dollar suddenly becomes $11, with the other $10 dollars being a windfall created (literally) out of thin air, which has neither been “earned”, nor does it have anything at all “backing” its value.

This ten-to-one dilution of our currency – which is nothing less than (legal) systemic fraud – is precisely how the Federal Reserve has been able to reduce the value of the U.S. dollar by roughly 98% (over its 98-year existence). But even stealing at this rapacious rate was not enough to sate the greed of the 21^st century Wall Street bankster.

They directed their spineless servants in Washington to change a vast number of rules (and eliminate even more “safeguards”) allowing these banksters to increase that (already obscene) 10:1 leverage to an utterly insane level of greater than 30:1 – which turned the entire U.S. financial system (and most of its debt and equity markets) into a collection of hopelessly unstable Ponzi-schemes. This leverage-insanity has culminated in the creation of the banksters’ private casino: the $1.5 quadrillion derivatives market – by itself more than twenty times bigger than the entire global economy.

Thus when a small minority of individuals engage in the “defensive” strategy of buying bullion, we are protecting ourselves in two ways. First of all, we are isolating our waning wealth in a form which the banksters cannot dilute/debauch with their money-printing. Secondly, we are accumulating this insurance against the inevitable financial collapse when the bankster Ponzi-schemes finally implode. There is, however, an indirect “virtuous circle” which is set in motion by the simple act of buying bullion, which (to the best of my knowledge) is not being discussed by other commentators – either in the mainstream media, or within this sector itself.

Let us back-up to the basic premise upon which fractional-reserve banking exists: we invest or deposit a dollar with a banker, and then they are legally allowed to dilute that dollar by anywhere from a factor of 10:1 or 30:1. However, each and every time that we take one of our dollars and invest it into precious metals, we are breaking that cycle of dilution (and currency-destruction).

As this purchasing of bullion increases, we thus began to weaken the cycle of serial currency-dilution, and effectively de-leverage our own financial systems. Note that this “involuntary de-leveraging” of Wall Street (in particular) has been made 100% necessary due to the complete failure of servile politicians and corrupt regulators to rein-in the 30:1 insanity of Wall Street. Indeed, after only a brief drop-off (when there were no “chumps” available to take their bets), all reports indicate that the Wall Street vampires are just as leveraged today as they were before they almost destroyed the global financial system the first time – except that this insane leverage is now concentrated in even fewer hands.

This means that as individuals accumulate bullion to personally insure and insulate their wealth from the fractional-reserve piracy of modern banking, that collectively our actions are insuring and insulating our entire economies against the inevitable economic carnage as the paper-bubbles collapse – including all of the worthless, fiat currencies themselves.

In fact, I only began to consciously explore this line of reasoning myself when I was admiring the brilliance of Hugo Salinas Price’s movement to re-institute silver money as a “parallel currency” in Mexico. Critics of this scheme have argued that most of the silver money being created would quickly disappear: people would spend their paper money, and hang onto their (higher quality) silver money.

My rebuttal to that has been that this is the beauty of Salinas Price’s proposal. Effectively, instead of Mexicans having paper “savings accounts”, where they give their pesos to bankers – and then suffer the economic rape of currency-dilution – Mexicans would have “silver savings accounts”, 100% immune to the monetary depravity of bankers. I then added to that by pointing out the cumulative effect of this: permanently reducing the percentage of our wealth which is under the control of bankers, and (simultaneously) permanently reducing our vulnerability (i.e. leverage) when these paper-pirates (yet again) destroy themselves (and our system) with their insatiable greed and reckless gambling.

The mainstream media have been programmed with their own rebuttal. They call such behavior “hoarding”. This is nothing less than a perversion of semantics. In fact, for more than 4,000 years most of humanity has held their “savings” in the form of gold or silver, and billions of people do so today, primarily in Asian economies.

What has been “savings” for 4,000 years does not become “hoarding” simply because the mainstream media chooses to be an accomplice of the banksters in helping them steal our money through their fractional-reserve Ponzi-schemes.

This supplies ordinary citizens with yet one more motivation to insure a large percentage of their wealth by converting it to (“physical”) gold or silver. Not only are we protecting ourselves individually, but collectively we are engaging in the “bank reform” which our cowardly and corrupt political leaders have failed to do.

This means that each and every time you hear some media talking-head parrot the words “hoarding silver”, you can immediately translate that to mean “insuring our financial system”. The fact that it will ultimately help to “blow up the banksters” (as a consequence of their own greed) is merely a fringe benefit.

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written by Jeff Nielson, June 21, 2011

Yes Bobbbny that was the distinction I was endeavouring to make with a previous comment:

HOARDING money is "bad"

STOCKING UP on necessities is "good"

Note that it is IMPOSSIBLE for someone to argue that they are "stocking up" on money - given that our fiat paper is constantly losing value.

Thus "hoarding money" is not only totally EVIL, but totally stupid - like trying to "hoard" water in a bucket with a hole in it. This is why the ultra-wealthy store THEIR wealth in antique art, mansions, classic cars - and GOLD.

That hoarded wealth not only does absolutely no "good" to anyone, but it is precisely the hollowing-out caused by their wealth-hoarding which has crippled all of our economies - or in keeping with the analogy I usually use: sucked all the "blood" out of our economies.

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written by bobbbny, June 21, 2011

There is a distinction between preparing and hoarding.
Hoarding has a bad connotation in our society because it implies you are not "consuming", which is what you must do to fit in with societal norms. Buy a new car, shop at the mall, eat fast food, go into debt for a worthless degree.
Preparation, in food, energy, PM,etc., means that you do not accept that this consumer based society will survive.
That automatically makes you laughable to the sheeple. They must ostracize you because you contradict all they live for.
Buying precious metals makes you a societal reject, so the MSM must label you an evil speculator, hoarder, or lunatic.
The real hoarders are the ruling corporatocracy today. They hoard the capital, they hoard the wealth, they hoard the healthcare, the art, and the power. They subject the sheeple to wealth confiscation through taxes, inflation, debt, and money printing.
The only thing they cannot hoard is the truth, and the truth is that their world will collapse on them because of their greed.
When this happens, there will be two kinds of people; Those who are prepared and those who are not.

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written by mathnerd, June 20, 2011

I`m sorry Jeff. I didn`t communicate myself clearly. Yes, people should certainly be stocking up in preparation for currency collapse.

I guess I use a slightly narrower definition of consumable. I consider a consumable to be something that degrades significantly after a short period of time, like maybe a few months. Fuels other than wood do not fit such a definition; nor do preserved foods etc.

I apologize for my earlier statement, both to you Jeff and to the readers who read what I said but did not reply.

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written by Jeff Nielson, June 19, 2011

Good to hear NavDerek.

Yes, the truth can only be suppressed, never buried completely. And the more that those on top seek to repress and deny, they more they expose their true intentions.

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written by navderek, June 19, 2011

Great article Jeff. Still insanely busy these days, but I do take the time to digest your analysis when I can. I have noticed that more people are starting to catch on...finally...My in-laws just converted huge quantities of USD into Gold bars and are in the process of converting all USD accounts into other currencies....finally!

Oh, and my 3 mth old already has a gold bar in her name and silver accumulation is just icing on the cake! :-)

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written by Jeff Nielson, June 19, 2011

Bobbbny, the "good news" here is that there IS still plenty of silver - still buried in the Earth's crust.

In that respect, time is our "ally". Even so, it will take MUCH higher prices AND 20-30 years of time to significantly rebuild stockpiles.

Given current supply/demand/price parameters, I see no likelihood of silver inventories STABILIZING (let alone building) until the price of silver is near/above $100/oz.

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written by bobbbny, June 19, 2011

Jeff;
I am glad to see you amending your position on ending this bankster cabal.
The buying of physical was never anything other than an attempt at preserving ones purchasing power, not an attempt to topple a major financial institution.
They are quite capable of doing that themselves.
If the removal of silver from the marketplace hastens this demise, so be it.
It is coming soon enough anyway.
The point here is that there is not enough of the most precious of all commodities: Time.
At these artificially depressed prices, we should be "conserving" all we can.
For those who believe we have all the time in the world, think again.
Take a look at this.

http://www.zerohedge.com/article/trading-over-counter-gold-and-silver-be-illegal-beginning-july-15

That's right. They are already moving to push individuals out of the PM markets, blaming it on Dodd-Frank.
There is absolutely no end to what they will do.
Buy physical now.

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written by Jeff Nielson, June 19, 2011

Thanks for the comments.

Mathnerd, the ONLY truly despicable "hoarding" which takes place in the world today is those who hoard MONEY. When you talk about people hoarding consumables, make sure you understand exactly what you are referring to.

These are people who are worried, because they KNOW that the paper in their wallets today will NOT buy the same amount of food if they wait to buy it tomorrow.

Who's "fault" is that? The fault of people who are trying to avoid going hungry? Or is is the fault of the bankers DESTROYING the value of their paper - which FORCES such conduct?

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written by ben.roberts13, June 18, 2011

Yet another excellent article in your own inimitable style I dearly love. You and C.B. Willie are my favorites because you both call it like it is. Thank you !!!

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written by mathnerd, June 18, 2011

Unlike you, Jeff, I don't automatically detest the word "hoarder".

"Hoarding" silver is a very good practice; you make a very good case for this.

But I'd say the msm has it right when they criticize a person for hoarding consumables. Things that could easily rot under room-temperature conditions in a reasonable amount of time.

You never have to worry about this with the monetary metals, though.

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