Juxtapose - Debt, Money,
Silver and Gold
By Dr. Jeffrey Lewis
One of the
most compelling ratios describing the true nature of the current
economic-financial state of affairs is the current relationship between labor
force participation and corporate profits.
participation is at historic lows at a time when corporate profits and equity
markets are at all time highs.
One of many
such ratios, this represents the quintessential reflection of the effects of
monetary policy gone wild - where asset prices have risen without the promised
underlying surge in real economic growth.
economists will no doubt rationalize that seven years is 'not enough time' to
perceive the trickle down effect of monetary policy. Or they proclaim that we
should have done more - even more evidence of the absurdity.
destruction of labor, in addition to (but also apart from) the turning of
demographics, coincides with the demise of culture and can only lead to a more
beginning to see the effects of this today, where civil unrest slowly feeds the
political appetite for the growth of totalitarian statism.
relationship between labor force suffrage and the falsity of corporate profits
is one relationship, similar dichotomies can be observed in the housing market
and, of course, price discovery in commodity markets - with silver being the
In housing, on
average, the relationship between rents and underlying property valuation has
once again disconnected beyond the rational.
pockets of the world, real estate values have gone up. And has once again, (not
with the widespread organic participation of individuals and families, but
through the use of investment leverage [debt] and cash as hedge funds and other
speculators), swooped in on the tailwind of negative interest rates.
increasing home ownership, the numbers are in decline. In fact, the rate of home
ownership is at a fifteen year low.
In turn, the
cost of renting has increased, and yet not enough for the future servicing of
landlord debt - the low-interest rate leverage employed to reflate property
false dawn in housing was fueld by the speculator class – hedge funds and
private equity. Because property management requires actual management
expertise, the quality and value of housing will likely decline much further and
faster as the leveraged private equity realizes losses and abandons ship.
It's one thing
when legions were turning in their keys as valuation fell below the water line
for individuals, but quite another when investors walk away, leaving a
qualitative dimenstion to the vacuum left behind.
But the poster
child for financial-economic derived mismatch is of course the silver market,
where price management has occurred for so long that few recognize it - and this
includes a significant portion of the precious metals analysis community.
other asset class is overtly manipulated is not yet enough to remove the taboo
around gold and silver price manipulation.
physical supply becomes further constrained by the failure of new stock from
mining to come to market and the continued yet constant baseline sequestration
of metal into the myriad of industrial uses, the price should naturally rise.
The absence of profit margin in the remnant and battered mining sector should be
a flashing neon sign for common sense.
real supply pales in comparison to the sheer volume of paper promises. Instead,
we have the illusion of supply from futures markets; represented and managed by
the sheer size of the concentrated corner of selling in silver. A selling
position maintained by the tiny few investment houses – and equivalent
concentration of power that exists above the law. In fact, nothing comes as
close to directly determining price.
The big short
is like a giant planet orbiting around this planet of paper price discovery,
exerting primary influence and controlling the tide of valuation.
It is not some
natural law holding it in place - like a new force of gravity. It is
artificially dense and held together via belief, faith, and a thin layer of
force. A force defending the last gasp of fiat.
The longer it
goes on the more visible it becomes and the harder it is to ignore, unitl
ultimately, we get to a galactic implosion and then explosion we've all been
For more articles like this, including thoughtful precious metals analysis
beyond the mainstream propaganda and basically everything you need to know about
silver, short of outlandish fiat price predictions, check out http://www.silver-coin-investor.com