Silver As A Strategic Metal and Why Prices Will Soar
The arguments in favor of silver as an investment asset are growing rapidly. In the opinion of the Jackass website, silver is the most under-valued hard asset in existence, with the highest potential for price appreciation on the globe. To begin with, central banks own no silver, but do own huge tracts of gold. Industry has huge demand for silver, but a trifling amount for gold demand. The investment demand is another key factor in favor of silver, but also for gold. Ever since the tech telecom bust in 2000, the precious metals growth curve has been evident. Ever since the subprime bond disaster in 2007, followed by the Lehman strangulation in 2008, the precious metals growth curve has continued. It is suppressed like holding back a team of six stagecoach Clydesdale horses by simple leather straps held by mere men with computers on their backs. Ever since the QE inflation policy of monetizing the USGovt debt, the monetary role of Gold & Silver has never been more acute in modern history. But silver offers much more.
Since 2012 with the African style monetary policy, also shared at times by South American nations, the US Federal Reserve has been forced to succumb to hyper monetary inflation of the unsterilized variety. It is the most dangerous form of monetary policy to adopt, a sign of utter desperation. With the desperation has come astonishing price capping of the precious metals market, while at the same time reliance upon isolated wars to steal central bank gold at vaults of defenseless nations. The effect upon economies, hardly ever spoken of by the devoted lapdog financial press, replete with their drone message of a fake sluggish recovery, is for profound capital destruction after seven full years of liquidity spew. The economic stimulus will find even more monetary abuse from greater deficit spending, thus more motive to own precious metals. To be sure, the QE bond purchase initiative is kept within the financial sector for service to the banker masters who have captured the USGovt. This is self-dealing on its face. However, hyper monetary inflation always causes capital ruin in an assured sequence, which cannot be averted, even by Fascist Business Model dictums and propaganda.
The response to monetary abuse has always been a return to honest money and viable sound monetary systems. This time will be no different, in its return to Gold & Silver as foundation, except that the movement will come from the East, led by a global insurrection. The West can join the strong sturdy secure movement, or be left behind. Even England recognizes the shift in global winds, eager to build the RMB Trading Hub in London. The Chinese are leading the global reform movement, and are likely to encourage the growth of the German RMB Hub in Frankfurt. The Germans have significantly more trade with Russia & China than the fascist core in London Centre, offering excellent leading edge product lines and world class engineering which the British cannot ever match.
If QE were indeed stimulus, then the USEconomy would have responded after a couple years of the wretched cursed policy at work. It serves Wall Street and the banking sector, and nothing else. The capital ruin and damage are evident in the constant negative GDP (with proper inflation adjustment), the high jobless rate, and the hopelessly rigged financial markets. The USFed has no business propping up the stock market or the corporate bond market, nor the crude oil market. But they have seen fit to consider stocks and crude oil as critical assets, and thus in need of support (to be read as price rigs). The effect of seven years of QE has been a bloated balance sheet at the USFed with $4.5 trillion in toxic assets. The leading toxic asset is the pristine AAA subprime USTreasury Bond. In the last week, China has just downgraded the USGovt debt to a B type grade, which means non-investment grade. In order to keep it all in check, all under control, the USFed must resort to coordinated efforts. They use QE to purchase bonds that are being dumped for foreign creditors. They also use Interest Rate Swap contracts to fabricate fake bond demand, with the levers held at the Exchange Stabilization Fund operated by the dutiful corrupted USDept Treasury. The ESFund is multi-$trillion machinery.
If the entire QE process were stimulus, then the resulting Money Velocity would not be in such dire condition. It was in decline until the Lehman subprime events in 2008, and it continues in decline since QE was put into force in 2012. Perhaps it creates stimulus to the bond market, but nothing but a gigantic wet blanket on Main Street and the tangible USEconomy.
No single graph demonstrates the failure of monetary policy more than this Money Velocity horrendous decline. That is why it never appears in the Wall Street Journal or New York Times, but the Golden Jackass site shows it periodically as a measure of failure. When the toxic vat of the USFed balance sheet reverses, along with those of other central banks, the flow will be from sovereign bonds (like the USTBond) into gold bullion. The trend will be to replace the global banking reserves with hard assets like gold bullion. Both Gold & Silver will become monetary metals. However, a whiff of something very new and refreshing is in the wind. Silver might instead become a core strategic asset for the energy sector, thus binding with the monetary role of Gold. The Paradigm Shift is to have an energy angle, and silver is at its core. Note the parallel from the Petro-Dollar, where the USDollar was intricately linked to the energy sector.
Fractures And Rebellion
Ten years of tremendous monetary expansion should have been accompanied by ten years of gold price appreciation to keep pace. Instead profound price suppression has been enforced. It is breaking down with the bust of the Petro-Dollar, and the dismantled derivative structures that have held the USDollar, the USTBond, and crude oil together. Both Japan and China have halted USTBond purchases. Now Germany is shedding USTBonds in favor of RMB-based sovereign bonds. They talk little of adding gold bullion, since such news cannot be cited in the Western press by fascist fiat rules. Such might be deemed financial terrorism by the Washington fascists. The straw dog argument should always be noted, then dismissed as absurd. Critics claim that there is inadequate Gold & Silver supply to match the rising money supply, the monetary aggregate. They claim the money growth was necessary and urgent in order to manage the global financial crisis that they created in 2007 and 2008. Hokum! There is plenty of Gold & Silver to cover the huge amount of money growth in the last several years, provided the precious metals prices are multiples higher. It is coming like day follows night, as the banker cabal cannot hold back the coiled spring.
The rise of the non-USD platforms is very powerful and gaining enormous momentum. While the United States is busy igniting wars like in Ukraine, Syria, Djibouti, Yemen, with furtive efforts to engage armed conflict in more nations like Iran, North Korea, and the South China Sea, the Eastern Hemisphere has gone on strike with respect to the King Dollar Court and its not so hidden war of terror in the currency defense. The lost global currency reserve is near, the movement having gained momentum in the last two years. It seems the eastern response to the Ukraine War plus the Iran squabbles, has been to build non-USD platforms and to construct workarounds for the feeble sanctions. See the Jackass article from December on the topic, entitled “The Integrated Non-Dollar Platforms” (HERE). Clearly the United States is using war to defend the USDollar, a development which will not stand and cannot continue. When the Jackass made the war defense forecast back in 2005, it was considered foolish and silly. Not anymore! The rebellion from the East will be coordinated, broadbased, and severe in its effect. The paper mache armor constructed by the fascist tagteam of the USFed and USDept Treasury cannot stop a bullet, cannot avoid fire, and cannot serve in the financial war. The rise of non-USD platforms is the battle cry waged against the King Dollar, whose financial war takes place in the global seas of false liquidity poured out by the banker cabal and subservient central bank franchise system.
With a weak economy, gaping $trillion deficits, rigged financial markets, permitted sovereign bond fraud, dependence upon QE inflation, rejected global trade unions, the Eastern resistance is clear. Furthermore, the Belt & Road Initiative, combined with numerous non-USD platforms, signals the united rebellion. The global system will endure fractures with the broader trade payments done outside the USDollar, the rise of the RMB-Oil-Gold contracts in Shanghai, and the upcoming China-Saudi oil purchases in RMB terms. Next on tap is the introduction of the Gold Trade Note, expected to be built atop the Shanghai integrated contracts. The RMB Trading Hubs will also feature Panda Bonds, where foreign entities like the Italian Govt can issue bonds to finance deficits in RMB terms, thus attracting Chinese investment with no currency risk.
Two extremely important developments have captured global attention in the last couple weeks. US allies are buying crude oil in Euro terms, which should enrage Washington. The effect is to bring about a USD index decline and rise of the Euro. It is almost comical, since the European Economy generally is not chugging along with any gusto whatsoever, outside the German border. But the effect is on financial markets, not the economy. The EU will suffer on its export trade, just like in 2009 before the Euro Central Bank caved in to reduce interest rates (a correct Jackass forecast). The second important development is more psychological in its financial warfare. The exposure of gold vaults by Russia and China serves as a challenge to the Untied Socialist States to match the challenge. The USGovt gold reserves are vacant, as Fort Knox serves as a nerve gas warehouse with a couple barrels of old gold coins in the dusty corner. To be sure, the Gold Standard is coming from the Eastern corridor. The Global Paradigm Shift is well along in the great transition. The Gold Trade Note will supplant the USTreasury Bill in trade payment. The CIPS bank transaction system will work around the abused SWIFT system. The vast multi-$trillion cornucopia of Eastern infra-structure projects linked to the Belt & Road Initiative will continue unabated, uninterrupted, and unrivaled in human history.
The global rebellion will take place in the form of trade payment done outside the USDollar, and sharp reductions in USTreasury Bonds held in banking systems. When the USDollar loses the bulk of its global currency reserve status, its privileges and deep advantages will fall away. The people will not recognize the lost reserve factor, but they will surely notice the powerful profound pervasive effects. They will come in the form of price inflation entering the room from the imported channels. They will come in the form of supply shortage from rejection of USTBills in trade payment at port facilities. They will come in the form of social disorder as a result of inflation and shortage. The public response will be a vast torrent to purchase silver in protection, which could become a matter of survival. The more wealthy will prefer to protect their fortunes with gold. In times of great crisis, expect silver to be used to purchase the standard items like food, fuel, and rent. Expect gold to be used to purchase cars, homes, and businesses. The coming crisis from the lost USDollar reserve status is inevitable. It demands preparation. It will mark an important turning point in US history.
Pep Talk On Precious Metals
For those losing faith from multiple years of suppressed Gold & Silver prices, take heart. The Voice responded to a sequence of probing Jackass questions with a firm statement founded in hope, confidence, pointing to a new dawn in financial structures. It is next to impossible to explain to people how things are going to unfold if they do not understand the concept of mal-investment and the difference between currency and money. The ZIRP exhibits the distortions in faulty investments from zero percent money, while QE exhibits the distortions in pure bold rabid inflation. Precious metals are unique, serving as the only true store of value, standard of value and measure of value, besides being a medium of exchange. If one has physical metal stored and understands the inherent control with its direct access at any given moment, it has been and remains the safest way to protect wealth from the current powerful debasement. While people rush into crypto-currencies, they need to realize that crypto-currencies are not crypto-money yet. Once hard asset backed crypto-money is issued, it will be backed by primarily precious metals, structured on the blockchain technology. Crypto-money will wipe the floor with crypto-currencies and $billions will be lost in the process.
The Voice gave emphasis as follows.
The Voice expounded on some modern history. His knowledge base is broad and vast, a tremendous advantage to the Hat Trick Letter since 2008, for which the Jackass is deeply grateful.
Viewpoint On Future Path
The return of the Gold Standard comes finally after a generation of monetary abuse, whose climax is centered upon the hyper monetary inflation conducted by the US Federal Reserve. They have been the bubble meister supplier of first order since the 1980 decade. Stephen Leeb shares his opinion on the future path for gold to exceed $15,000 in the next decade. Gold is gradually being put at the center of trade payment, first with crude oil, then more widely in general trade. Integration within the banking systems would follow. China is on the verge of delivering gold within formal contracts, unlike the cash-trade West. When the $2000 price level is exceeded, made possible by the extremely critical Chinese platforms being rolled out, the Gold Standard will be better understood. Future gold price gains will be the norm, taking the price an order of magnitude higher. The West will require a big nasty learning curve.
Stephen Leeb offered yet another excellent summary of the gold price prospects, its structural linkage to the Chinese development of non-USD platforms, the crude oil market integration, global trade payment systems, and the new monetary system in preparation to replace the current corrupted toxic fraudulent USD-based system. Leeb describes a newly emerging system which will be capable to integrate the Gold Trade Note for global payments. Bear in mind that the Chinese Interbank Payment System (CIPS) is ready, and will supplant the SWIFT payment system in many Eastern locales. Leeb stated the following excerpt three weeks ago.
A Hat Trick Letter client, preferring to remain anonymous in today’s dangerous world where whistleblower efforts to expose corrupt leadership are labeled as espionage, offered the following excellent perspective. Goldman put out a gold positive article recently, but they are missing a very important point. In debate, is the real price of gold today, with all manipulative pressures from central banks and speculators aside. Goldman does not address the fact that the global gold market, including the LBMA, where over 95% of the trading is in unallocated paper gold. It constitutes a fractional reserve system, in which the ratio of paper claims to actual physical bullion was estimated by the Reserve Bank of India at 92 to 1. Such a ratio of paper gold to physical bullion means there is 92 times as many paper contracts outstanding as there is physical gold to cover them. If such manipulative speculation were eliminated, and these speculators forced to cover, the gold price would be free shoot upwards of 92 times in value. That would make gold close to $120,000 per ounce today! Just a thought. Continue on the base end. The USD-based money supply has risen 5-fold since 2009, given the major central bank monetary expansion without restraint. Use the gold price at that time for the calculation. Therefore napkin math means $1300 x 5 = $6500 per oz gold. Just a rough very conservative baseline. Establish the center by considering a roughly $60 trillion total USGovt debt liability, perhaps 30 times the current money stock. That would indicate a $30,000 gold price. Much higher gold prices are coming, along with silver. So many critical energy applications will rely upon silver, that it might be taken off the market for strategic purposes. Its price could be set well over $200 per oz.
U.S. Lost Control Of Silver Market
The United States is fast losing control of the silver market, from a production standpoint. The US is a minor silver producer, yielding to Mexico. The US has yet another example of the paper tail wagging the dog, but where the US is no longer a major player in the silver global output. Control is shifting elsewhere, to its producers, and to precious metal advocates. A little more than a century ago, the United States was the largest silver producer in the world. In 1915, the US produced 75 million oz (Moz) of silver out of the total 189 Moz mined in the world that year. The US had produced 40% of all world silver production, a giant in the sector. Mexico came in second that year by producing 39.3 Moz. In the last century, the US output in silver has been cut in half. The US silver production in 2017 will only be 34 Moz versus the estimated 870 Moz globally. The leading silver producing nation is Mexico, whose annual output has moved from 165 Moz three years ago to an expected 200 Moz by year 2020. Thus, US silver production only accounts for 4% of world mine supply versus 40% back in 1915. The US cannot control the price against world market pressures.
Lastly, the United States imports approximately 22% of world silver mine production each year, a total of 193 Moz of the total 870 Moz in 2017. While domestic mine supply is only 34 Moz, the United States has to import more than a fifth of global mine production to meet its silver market demand. Again, the US cannot control the silver price against world market pressures. See the SRS Rocco research site for an abundance of his excellent analysis (HERE). His work is regularly featured on the Hat Trick Letter. His most recent work is on the Eastern accumulation of precious metals, while the United States flows into the stock and crypto markets, like deceived sheep. The solution to the unresolved financial crisis is hard assets, not yet more fiat substitutes. Any competent silver research should include his work. SRS Rocco has done significant analytic work on the crude oil and shale sector also, bringing reliance to the EROI concept of energy return on investment. It has recently turned negative, thus unproductive.
The Scrap Silver Indicator
Scrap silver has vanished, a great indicator at the margin in this highly important market. Industrial demand has been relentless, enduring, and constant. It has drained the USGovt silver stockpile, reported to once being six billion ounces silver, acquired by US President Teddy Roosevelt. He had vision, and recognized real money and commerce. He built the strategic stockpile for both monetary and military purposes. He acquired and had built the Panama Canal. Today’s presidents are fully committed to predatory wars, fascist political structures, narcotics trafficking, currency pegs, banker privilege, and bond fraud. When the United States and other countries stopped producing official silver coinage, it was not due to any monetary conspiracy. Rather it was based on a straightforward problem framed in terms of Supply vs Demand. Because industrial silver consumption had skyrocketed after World War II, the silver market would have suffered deficits if the USTreasury did not sell silver into the market. A silver shortage was acutely evident, which made clear its strategic importance. In response, governments started to reduce, then to eliminate silver from their coinage in the 1960’s. Much of this silver, known as junk silver, was either purchased by investors or re-melted and sold back as supply into the market as bars. The majority of it was recycled for much-needed supply, while junk silver supplies have been fast vanishing. One can easily see the dwindling down of government stocks and older official silver coinage in the following chart. The margin of the silver supply is disappearing, thus creating an exacerbated silver shortage. The Jackass prefers to reverse the Rocco color scheme in his excellent chart. Notice the absent blue bar component since 2013, from no more official silver sales. The USGovt is heralding a severe silver shortage.
In 2007, total Official Silver Coin sales only totaled 45 million ounces (Moz), but this number surged to 135 Moz in 2015. From 2007 to 2017f (f = forecast), Official Silver Coin sales totaled 1045 Moz (over 1 billion oz). If the official coins sold since 2000 were included, the grand total would be nearly 1.3 billion oz. The key fact to take away concerning the 1.3 billion oz of Official Silver Coin sales is that this investor inventory will likely never be recycled as scrap to supply the market. Furthermore, the majority of the 1-oz to 100-oz silver bars will never be recycled as scrap either. While it is true that both official silver coins and bars will be sold back into the market, they will be repurchased by other retail investors. Thus, the majority of silver investment inventory is locked out as a future source of supply for the global fabrication demand. According to the Metals Focus 2015 Report on The Silver Scrap Market, only 3.5% of total scrap supplies in 2015 were from recycled coins. Furthermore, the majority of that scrap coin supply came from older unsold European official silver coins and blanks. Of the total supply of silver scrap in 2015, 55% was from recycled industrial scrap, 17% from Silverware, 14% from Photography, and 10.5% from Jewelry. The other implication is that collector edition coins will rise sharply in value.
What is quite interesting is that most silver jewelry is not recycled. The low price of silver jewelry does not motivate holders to haul it down to the pawn shop for cash redemption. For example, only 8% of total silver jewelry demand in 2015 was recycled. However, industrial silver recycling amounted to 18% of total industrial silver consumption in 2015. If recycled silver is included from photographic usage, the total amount increases to 20%. In conclusion, the investor has removed a certain amount of silver from the market. A large percentage (95-97%) will likely never be recycled and used as a future supply for global silver fabrication demand. Therefore, any increase in global silver fabrication in the future will be met by stagnating or falling supply as world mine production continues to decrease while scrap supply remains subdued. See SRS Rocco article (HERE). He is frequently quoted for his superb work on the Hat Trick Letter reports.
Silver Is Unique
For well over a century, scientists have strived to find another metal or another compound to replace silver in many unique applications. It is rare among metals and short in supply. Silver is mined between 9 and 11 times the volume of gold. Certain characteristics include light sensitivity, electrical conductivity, heat conductivity, malleability, contact resistance, and viral resistance. The list is long for its unique applications, like photographic development, electrical circuits, battery storage, jewelry, cutlery, metal alloys & cements, mirrors, industrial powders, and high-powered explosives. More recent applications include infection & burn treatments (biocides), lumber anti-insect treatment, and solar photo-voltaic panels. It seems the rate of new usages far outpaces the decline in photographic usage, as it yields to digital cameras. However, these cameras contain silver also in their internal circuitry.
Notice in the periodic table of the elements, the unique and important column of precious metals. The lightest metal in the special column is Copper (Cu). Each row represents the heavier elements, noted in a higher atomic number. The next heavier metal in the special column is Silver (Ag). The heaviest metal in this truly remarkable column is Gold (Au). All three metals in irreplaceable in their own right. Nothing is better on a cost-effective basis for electrical distribution than copper metal. Nothing is better for numerous applications than silver metal. Nothing is better for the timeless fungible, semi-inert, store of value than gold, used as money for thousands of years.
Next Generation Energy Systems
The storm centered upon silver is coming. Expect the silver market to undergo vast changes, whereby the majority of supply will be removed from the market since too valuable. It will before long be considered of strategic importance by numerous governments. It will be hoarded by nations, kept for energy systems, even weapon systems, and be stored as a national security asset. For instance, the US Cruise missile contains something like 30-31 lbs of silver, required for its guidance system. Stockpiles will be formed with renewed emphasis. New energy next generation systems, coupled with data communications networks, will have silver at their core. They will have silver at the center in almost every display upon rollouts, amidst publicity and national pride for the development. Russia will play a leading role.
As preface, publicity is warranted for a new next generation communication line which is likely to supplant and replace the fiber optic technology which came onto the scene in the 1980 decade with significant volume. Reports have begun to surface, written and otherwise, that silver strands will be capable of passing ten times the bandwidth versus fiber optic. The demand for new global layouts will be in the high tonnage per year. Just as CMOS technology brought about a quantum leap in chip processing speeds for computers, the silver strand will bring about a quantum leap in transmission speeds. The hunger for bandwidth will not cease, given the 4G demands with streaming.
Next comes the revelations and publicity of silver for its unique scientific properties, within the new energy production systems. Refer to electric fields, its lone isotope, harmonic frequencies, super conductivity, and associated electricity production. Gold has no known isotopes, but silver has one, a lone isotope which makes it extremely valuable. Expect next the introduction of implosion technology and single point energy output. Field energy through monotonic coating has become highly useful. Electro-harmonic frequencies have been converted to missing electrons, much like an osmotic membrane. The result is an electric field that vectors out, thus producing a flow of electrons (electricity). The energy is produced from a uniquely formed field. Silver can produce a highly efficient level of super conductivity, not necessarily with accompanied cold temperatures. Silver can produce similar electric output from its gaseous form. The super conductivity is associated with anti-gravity systems. Expect it to be combined with electric field-based propulsion systems. Bear in mind that World War II was used to keep some of this special energy technology protected, where many governments still today keep their science secretive. This trend is changing amidst certain accords, led by the Russian scientific community. Silver can be applied in a great many ways, and can be implemented in a broad variety of applications. The future next generation energy systems will have a common ingredient: silver. Please forgive the Jackass in the above explanations. They are being learned on the go by a person with basic broad scientific knowledge, while my specialty is mathematics, statistics, computing, along with finance and economics, not to mention Victoria Secret.
Visit Jim at GoldenJackass.com
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