Silver Shortages

There are reports of silver shortages this week.  The first and most important is that the US Mint will not be shipping Eagles next week, this after record buying in 2012 and 2011.  The US Mint should be the most powerful mint in the world and for them to cut shipments, even for a week, is a harbinger of things to come.

The next report is that industrial silver is seeing a shortage.  This was the goal of the "Buy Silver" movement and if we achieve our goal then we could see a crisis occur in the Fiat Ponzi that will be unprecedented.

In some order we don't know  i) shorts will get stopped out, exacerbating the up move and rendering the derivative part of the suppression scheme useless  ii) the COMEX, which has been defaulting on delivery for years, will default even more so, sending paper to buyers who seek physical  iii)  the dollar will falter as the reserve currency, rendering the MIC complex marooned and the debt worthless  iv) industrial supplies will have problems until miners unshelf some reserves.

Yet at what price will miners, who have already seen production plateau, release reserves?

We need to look at the last big more for silver, the move from $20 to $50, to know what the next big move holds.  While price is rising miners will hold their breath hoping to sell the top.  So if we start the move here, at $30, we should see a top of $75 looking just right for those hoping to take profit in silver.

Putting a time frame on this move is difficult, but once again history will be our guide.  It took silver about 6 months to move from $20 to $50.  This next big move should fall in a similar line.

Prognosticating is all fun and games, but remember that silver will be rising in part due to weakening fiat.  This means will and other commodities will be rising.  This will be a very exciting but also frightening time.  Having silver will help one preserve one's wealth, but in the coming months there will be other things more important to get in order.

For topically relevant reading from this blogroll see -

"The Looming Shortages", October 24th, 2012:

http://lhmarketwatch.blogspot.com/2012/10/the-looming-shortages.html

Currency Devaluation

The Yen is down, Japanese stocks are up.  The dollar is down, US stocks are up.  But in the case of the dollar Vs US stocks over the last two days the dollar did not give up its gains to the stocks.  The dollar was down (via the DXY) 2% over the last two days and stocks managed a paltry move.  It is dangerous when currency is falling and nothing else earns any payment.

Precious metals saw a nice gain on Thursday but came back to earth Friday.  Bonds haven't had a big move in weeks.  Oil sloshed around while the currencies devalued but had front run it anyway.  So in the last few days the world saw its currency devalue with nothing evening out the loss.  This is the most dangerous thing that can happen.

Yet this is what I have been expecting.  Many of us have.  We don't buy silver and gold to become rich, we own it to maintain our purchasing power.  In the long run I believe that is what will happen, and that is why PMs will likely make a nice big move coming up, probably leading up to the debt ceiling debate.

But the currency devaluation of late should make everyone panic.  It is sad that it is not.  People using dollars to store their wealth lost 2% of their purchasing power in 2 days.  We don't need to pity them, for they shouldn't have much faith in the dollar anyway, but the fact is people are scared to invest in stocks and I don't blame them.  They don't know the alternative though - wealth should be stored in things with intrinsic value, namely gold and silver.

Physical Buying will Prevail

No matter what spin or manipulation the financiers, mediamen, and economists give, in the end there will be no way to stop a sharp price rise in physical bullion.  It has taken awhile and it could take longer and it may take until there is litterally a shortage of bullion for purchase.  That is the long term scenario though, as it is also possible that one of the Central Banks runs out of ammo, switches to back their currency with gold, and the shorts get squeezed out epically.

It is a David vs Goliath battle.  On one side are the people that buy physical bullion.  These people are rarely even millionaires which makes the buying small in comparison to what the paper pushers (banks, HFs) can do.  On the other side is anyone buying miners, ETFs, and other paper vihecles, people shorting the vehicles (JPM or individual day traders), and also people who believe paper is money.

The last group is important to dissect because if people stopped using dollars to buy milk and cookies and we used silver we would crash the system in a day, but this would mean a paradigm change and the status quo is not ready for that and will likely clutch their milk bottles until a new system has formed.  People who own the paper metals and short the metals and other vehicles are just chasing paper and do not realize their is a better system.  This is why it is likely that the only way the system will change is if enough people take enough bullion off the market and create an actual physical squeeze.

There is also a chance that the Central Banks go careening over an edge of monetary policy that no one knew was there, but since all Central Banks are cordinating with each other it is likely that they will not lose their nerve and will keep printing.  If one Bank did jump from the dollar to gold the system would change on a dime but I don't think that will happen.  That is why it is important for us to continue to spread the word and do our part and buy silver.

It may seem like a tall task to take on - the fight for our ability to use real money - but it is ours to keep.  We have the wind at our back considering we our taking a finite resource from a group that prints their resource - the dollar - out of thin air.  But it seems daunting when it takes years and years of high unemployment and other troubling economic news to wade through.  We keep fighting though, as it is not only our nature, it is our destiny.