Buying Silver in the Age
Inflation and Other Political Delusions
By Dr. Jeffrey Lewis
Spokespeople for the U.S. Federal Reserve have
been saying that rising food and energy prices are transitory. They have now
been pushing that illusion on the market for ten years, and some traders are
still waiting for inflation to fall.
Nevertheless, the fact is that these price
rises are not transitory, and they are instead permanent, systemic and
intentional. Furthermore, prices are going to keep on getting higher and higher
by all rational indications.
Debt Expansion Policy Makes Inflation
When Ben Bernanke was first appointed Chairman
of the Fed by then-President Bush in February of 2006, the U.S. Treasury’s
funded debt was ‘only’ $8.183 trillion.
Nevertheless, by last December, when the FOMC
announced its latest monetary policy measures, the U.S. Treasury’s debt had more
than doubled to hit the even more astronomical 16.376 trillion levels.
In other words, the Treasury’s funded debt had
increased by more than 100% over a period of almost seven years, averaging a
rise of roughly 14.6 percent per year during that time frame. Commodity price
rises in U.S. Dollar terms have been relatively subdued in comparison with this
remarkably high level of U.S. debt expansion.
Silver as the Financial Solar Plexus
The solar plexus of the human body is where
the connection between the body and mind - the organic and the non-organic —
come together. Silver is like the solar plexus of the world of economics and
finance, acting as both a tradable commodity and a monetary asset.
In the silver market, the relatively primitive
market laws of supply and demand interact with the higher level market-driving
factors of faith, perception and behavior on the part of its human participants
to determine a market price.
Although modern market-based finance still
largely depends on faith, confidence and human perception, it seems that the
silver market’s price discovery mechanism is being increasingly usurped by
obsessive technical analysis and computer driven trading that largely amounts to
picking up nickels in front of a steam roller.
Fiscal Cliff and the Debt Ceiling Debates
Showcase Delusional Politics
The U.S. Fiscal Cliff debacle has made the
situation as clear as mud; although just about anyone could dispassionately do
the math. It makes little sense to run $1.5 trillion annual deficits when only
proposing roughly $600 billion in spending cuts over 10 years.
The irony is that the next delusional
political drama —raising the U.S. Debt Ceiling — has been put off, with some
even proposing eliminating that mandate altogether. If done, this would remove
the very last tenuous thread of confidence holding the U.S. Treasury’s finances
Modern politics and economics tend to offer
explanations where the cause is not readily apparent as the workings of a lost
tradition. For example, apparently “everybody knows" that the way to make a
person or a nation "richer" is to create more money. The establishment never
openly states that this is actually the case, but they instead just print and
distribute a million dollars of un-backed, debt-based currency per person.
The end result is that financial markets are
increasingly broken and fair price discovery in the commodity markets is
becoming non-existent. This means that buying physical silver in this day and
age is like planting a seed in fertile soil.
Like oil, silver is a scarce — but very useful
and densely packed —commodity that fulfills its various industrial and monetary
functions well. Fortunately for long term silver investors, silver are much
easier to store in its physical form than an equivalent value of oil.
For more articles like this, and to stay
updated on the most important economic, financial, political and market events
related to silver and precious metals, visit