Silver price: Hey Silver Bugs, You Cryin’ Yet?

The more silver bugs cry as they watch the latest breakdown in the silver price the better it is for the rest who will make it through to the other side of the biggest financial crisis since the Civil War.  Sign-up for my 100% FREE Alerts

Take in the economic scenario the Fed faces, then ask yourself what the Fed will do about it and which planet will the silver price orbit after the dust settles.  Here are the facts that should calm investor fears:

“Let us be honest. The U.S. is still trapped in a depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP,” The Telegraph’s Ambrose Evans-Pritchard penned in a Jul. 4, 2010 article.

Now look at Shadowstats economist John Williams’ chart, below.  GDP is again dropping, 18 more months later, from Evan-Pritchard’s last year’s Independence Day article. (The real GDP is calculated by Williams, shown by the blue line.)

Now, take a look at the number of U.S. food stamps recipients?  Does the graph, below, square with an employment rebound?

If the economy has been on the mend, slowly creating jobs for nearly a year now, why have there been 4 million more food stamps recipients in the U.S. since July 4, 2010?

Note the blue line in John Williams’ graph, below.  That’s the real unemployment rate (approximately 22.5 percent)—the rate that would have been reported by the BLS during President Ronald Reagan’s first term (1981-85).

And the jobs created which blunted a crashing jobs market have been the throwaway kind.  See BER article, Gerald Celente:  Brace for Economic 9/11.  The trends forecaster describes the type of jobs created, mostly the type of local jobs that you would find on the tropical island of Fiji, not the high quality jobs found in Germany or Switzerland.

And it’s about to get worse, as Celente predicts.

The U.S. is “tipping into a new recession,” ECRI’s Lakshman Achuthan told Bloomberg Radio on Sept. 30  “We don’t make these calls lightly. When we make them, it’s because there’s an overwhelming objective message coming out of our forward-looking indicators. What is going on with the leading indicators is wildfire; it’s not reversible.”

Since Sept. 30, Achuthan hasn’t budged from his dire forecast.  (See Economic Cycle Research Institute—ECRI, here and, of Dec. 9, here.)

Okay, the Fed faces a U.S. economy that’s rolling over—again—from an already negative GDP, according to John Williams.

So, what will the Fed print to prevent an economic collapse?

Watch it; it’s a trick question!  Jim Rogers explains in a Dec. 14 interview with TheStreet:

TheStreet Reporter: What should the Fed do at their upcoming meeting, aside from QE3?  We’ve seen more Fed presidents come out and call for more monetary easing.  What should they really do?

Jim Rogers: They’re already, Alex, they’re already . . . QE3 is already here, Alex.  Get out the numbers for non-seasonally adjusted M2, and you will see that Mr. Bernanke said, in the summer, we’re going to keep rates artificially low. You can’t just say the words, you got to do something.

Rogers goes on to say that the Fed hasn’t stopped printing money since QE2; it just wants people to think it has.  And thanks to a complicit media, whose been told to repeat the con over and over in an effort to prevent a bona fide run on currencies, some investors still believe the Fed has stopped printing.

Look at the chart, below.  A couple of months ago, the Fed was expanding M2 money supply by 20 percent!  That’s a rate that even former Fed Chairman under President Nixon, Arthur Burns, would blush at, as the maestro of the 60s and 70s presided over the highest U.S. inflation rate since the Civil War.

The Fed never stopped printing!

Silver investors now wait for Bernanke to announce even more printing! That’s when the top blows off the gold and silver market, according to Jim Rogers, Peter Schiff, Jim Rickards, Marc Faber, James Turk, James Sinclair and FX Concepts John Taylor.

That signal could come in late January, maybe tomorrow, or next week, but it’s coming.  Let’s see what more Fed money printing will be called this time.

Back to the Rogers interview.  Notice how the scripted question by TheStreet reporter was written in a way to fool the public into thinking that the Fed hasn’t been printing money since so-called QE2 ended on June 30?

It’s the ol’ leading the witness trick, with a false premise to plant a lie in the minds of the observers, to throw them off the track to the truth.   At least TheStreet reporter didn’t stoop to the, “Well, of course you’re going to say that, Jim, you sell your Rogers Commodity Fund” line, or something along those lines.

Here’s another example of the vicious propaganda thrown at some pretty smart guys who warn of a coming tsunami of commodities price inflation in 2012:  Witness the Marc Faber interview on CNBC, last week.

In his interview with CNBC’s ‘working girl’, Maria Bartiromo, Marc Faber got the better of the dullard Bartiromo, working her over pretty well (if she noticed).  Faber’s had 20+ years experience dealing with such nonsense during his time living in Thailand.

Do a Google Images search on the term, “Maria Bartiromo.”  You’ll see endless poses in the search results.  That’s what CNBC thinks of you—a 20-year-old drunk on a Thai vacation.

Bartiromo, after hearing Faber’s gruesome assessment of the world economy, said, “Okay, you think the world is ending, so which five stocks would you buy?”

By the way, if you didn’t listen to the Bartiromo interview, Faber outdid himself with yet another one his great Faberism.  He retorted, “I Have A Very Special Stock Tip For You. The Symbol Is G-O-L-D.”  Now, that’s a great Faberism!

And finally, and more dramatically, The Hat Trick Letter’s Jim Willie explains the Fed con in a really classic Jim Willie style—his style is the rambling and information-packed rant!  See BER article and link to audio interview here.  Willie covers almost everything in this interview that silver investors should know.

So we see sub-$30 silver.

Now for the question that’s on everyone’s mind . . . drum roll please. . . how far will the silver fall?

And the answer is the same as it has been since the bull market began in 2002: When every last ripe apple falls from the shaken tree.  That’s when the price will stop falling.

And right now, the tree needs to be shaken as hard as the Fed can shake it, because the next move up in silver will most likely be akin to the last one.

You remember, the move from $17.50 to $49.94, from August 2010 to April 2011, a 177 percent price explosion higher within 8 months?!

The Fed would just prefer the base of the next move for silver (gold, too, as well as oil and other commodities) is lower before the massive catapult higher.  Also, remember, north of $50 in the price of silver unleashes the metal; there is no resistance levels above that price.  This is the last stand for the Fed, and it will make the best of it.

14 thoughts on “Silver price: Hey Silver Bugs, You Cryin’ Yet?

  1. A contrary view…silver @or below $21 by mid 2012…remember pre 2007 when “almost” everyone believed you couldn’t lose with real estate. 
    Hey now you can’t afford real estate buy metal, you can’t lose…
    same trick but on a smaller budget.

    • Interesting point but I don’t think the fundamentals are the same (metals and real estate I mean). I agree with Dominique, now can be a very good time to buy, especially for first time buyers that have no physical possession yet.

      In New Zealand, buy silver with MyGold, independent gold and silver merchant.

      Cheers!

      Al

    • Hi Interstatex,  I recommend reading http://www.beaconequity.com/jim-rogers-vs-marc-faber-dog-fight-breaks-out-in-asia-2011-12-02/  and then listen to the Stephen Leeb interview.  He may sway you a bit regarding the industrial applications coming out of Asia.

      And as far as the hype, consider Marc Faber’s informal polls he conducts regularly at conferences he attends.  Very few investors hold bullion.  RE, on the other hand, was speculated by every Tom, Dick and Harry during the last cycle.  It’s estimated that less than 1 percent of investors hold any meaningful position in the metals.

      Dom

      • Hi Dom, cheers for the link, very interesting.
        I would entirely agree with Mr Leeb that this is a war for resources, hardly surprising with the rate of growth of the worlds population. He also anticipates issues in the future where we’d find agreement ( Copper ) but some of his logic is seriously flawed.     
        To deal specifically with silver and therefore solar panels only, his concern was that China was taking over the business of manufacturing solar panels.
        He then linked that to a fight for the resource silver and a price explosion.
        If America makes 60% of the solar panels and China 40% and the usage of silver = 100…it would still be 100 if America made 1% and China 99%… how does that effect the commodity price. Silver is not even a scarce commodity to start with. He totally disregards any future developments in silver free solar panels and the fact the US solar industry has shown 140% growth in the last year.

        Of course his views are somewhat tainted by the fact he was pitching his new book  ”Red Alert” about China’s prosperity destroying America. For those of you who chant U.S.A,U.S.A there’s a book signing at hooters @8

        As far as the hype..” It’s estimated that less than 1 percent of investors hold any meaningful position in the metals…”  .ok so 99% of investors would agree with me? 

        I believe silver’s heading down in the new year, maybe right, maybe wrong.

      • Hi Dom, cheers for the link, very interesting.
        I would entirely agree with Mr Leeb that this is a war for resources, hardly surprising with the rate of growth of the worlds population. He also anticipates issues in the future where we’d find agreement ( Copper ) but some of his logic is seriously flawed.     
        To deal specifically with silver and therefore solar panels only, his concern was that China was taking over the business of manufacturing solar panels.
        He then linked that to a fight for the resource silver and a price explosion.
        If America makes 60% of the solar panels and China 40% and the usage of silver = 100…it would still be 100 if America made 1% and China 99%… how does that effect the commodity price. Silver is not even a scarce commodity to start with. He totally disregards any future developments in silver free solar panels and the fact the US solar industry has shown 140% growth in the last year.

        Of course his views are somewhat tainted by the fact he was pitching his new book  ”Red Alert” about China’s prosperity destroying America. For those of you who chant U.S.A,U.S.A there’s a book signing at hooters @8

        As far as the hype..” It’s estimated that less than 1 percent of investors hold any meaningful position in the metals…”  .ok so 99% of investors would agree with me? 

        I believe silver’s heading down in the new year, maybe right, maybe wrong.

      • Yeah, Peter Grandich is famous for saying, “Those who make a living with a crystal ball end up eating a lot of glass.”

        Sure, of course, the market share for solar panels isn’t in the bag for China, though, right now, the country still has the better mix between capital investment, capacity, labor force and government-sanctioned incentives.

        Irrespective of that, however, the data show less then one percent of total energy consumed comes from sun technologies.  Though, silver, relatively scarce in the sense that demand has outstripped supplies for two decades, the amount needed in the solar industry and wind turbine is staggering when compared to the realistic outputs of silver production.  I’ve looked at the data, and a 5 percent clean energy component to the world’s energy needs down the road is enough for me to sell my first born to get some silver [then buy him back from the repo agreement ;-) ].

        As far as the favorite go-to thinking of some magical technology coming out of the blue to provide a choice beyond what’s on the drawing board now.  I’m with you; I’d love to see it, with its features of no capital investment requirement and instant roll out.  The most likely scenario, I think, is a disruption in energy supplies and a mass catch up by the OECD nations to incorporate infrastructure needed in a post fossil fuel age.

        But, a great, great economic Depression  would put a nix on the whole outlook for everything, not just silver, which, in my opinion, is not likely when the tool of the printing press is available to push the inevitable solvency crisis out another year or two or more (still surprised by the length of time the market has given these bozos).  The handing of the monetary system is key to all metals.  But keep in mind, that the silver price may decline in nominal terms, but not necessarily in real terms, against most other currencies and ‘things’.  Any precious metal should serve the investor well.  Kyle Bass said yesterday at the close of his interview on CNBC, that the market will eventually figure it out that the ‘liquidity’ crisis is really an insolvency crisis.  LOL  Lot of people don’t like to play with math, I suppose.

        I think, the industrial application for silver (much more than just clean energy), could be a mere sideshow under these most dire financial times.  The only fear I have, voiced by Faber, is the public’s response to the ‘haves’ following a severe devaluation of many currencies.  When people hurt, they go after anyone who ain’t like them.  It was once the Christians, then Jews, now Muslims–and so we go.  The poor take from the rich, et cetera.

        Well, it’s back to work for me; I need to write another propaganda piece on the virtues of hold metals.  Apparently, yesterday, Mr. Roubini has thrown, yet, another gauntlet.  Between him and Krugman, I’m entertained much, though, the latter deserves the Nobel Prize no more than Mr. Obama deserves one–in my very humble opinion, of course.  LOL  But, then again. both prizes fall under the ‘soft’ sciences  If you haven’t already, read the book, Political Ponerology.  The author explains how a Krugman and Obama can ‘happen’.  LOL  Google it; it’s a free book, online.

  2. I agree the fundamentals are not the same. My point is that as a store of wealth (or a hedge against the dollar) it is as vacuous as the real estate ” investment” became for many.
    Silver although hyped as having large industrial demand actually is falling in demand, it’s peak was pre digital photography for obvious reasons. Since then it has been used in semi conductors, clothing, jewellery and solar panels but not at levels previously seen. My understanding is that production is also actually surplus to demand as well. Solar panel companies are hardly thriving and new technology is already replacing the silver used.
    The dollar may well collapse ( that seems to be the single fundamental most small investors have bet on) but there is no rule that says silver will automatically rise…if people are struggling to buy food will they buy surplus silver?  Will gold and silver continue to be priced in dollars in the future? If so, why would an off-shore investor exchange into dollars to buy silver, only to sell the silver and have the profits absorbed by a depreciated currency and fees. Silver profits are also taxed differently to gold.
    Silver, like real estate is really over-hyped in my opinion and only time will tell.

    In New Zealand, buy GOLD with MyGold, independent gold and silver merchant…avoid the silver

    • The link in my response didn’t come out.  Go to the article, titled, Jim Rogers vs. Marc Faber, Dog Fight Breaks Out in Asia.  There’s a link which takes you to the FSN interview with Leeb.

  3. some pretty big buyers stepped in today will they hold it not sure. But silver gold ratio shows me silver will go up only the timing needs to be right today i saw huge buyers might try a little it today and if it goes will add

  4. It looks like a decent time to start buying Gold and Silver again, even though (my) charts tell me that a 10% correction in Gold and over 20% correction in Silver could potentially occur.