Silver Price Targeting
the Will of Central Banks
By Dr. Jeffrey Lewis
price of silver has become a central banking question. Proof of direct
intervention is unnecessary. The overwhelming concentration of net shorts on the
Comex, whether hedged or not, constitutes the basic violation of the fair market
concentration is allowed to exist — despite purported and publicized
investigation into silver market manipulation —remains a testament to the power
of those that stand to profit the most from it.
considers the actions of a large bullion bank that profits by cornering suckered
weak silver longs — or the entire fiat currency system that depends on
effectively limitless paper and electronic money creation —the success of these
practices hinges on the increasingly tenuous acceptance by a largely brainwashed
population of the country’s government-declared legal tender.
Easy Credit and
In the modern age,
everyone wants to be a trader, and this is the mentality initially brought to
the silver market by many people as they enter a market for a commodity that has
become the last true portfolio diversifier.
Who can blame
them, when any adult alive today grew up during the greatest credit expansion
the world has ever witnessed? In this easy credit environment, “return on
investment” was a badge of honor and a boutique industry available to just about
Now that the
unraveling of this credit boom has started to occur, it seems the lesson’s
impact was far too short lived, as the central banks of the world coordinate to
re-inflate their economies once again by printing more and more of their local
fundamental problems with price targets are that the price is measured in a fiat
currency, and that the price can be managed by manipulating the commodity
futures markets that do not require the seller to deliver a physical commodity
into a futures contract.
Perhaps one of the
most frustrating things about trading the precious metals is that price action
unfortunately directs perception. As GATA's Chris Powell has pointed out,
movements in the price makes market commentary.
So, as soon as the
price of silver drops, investors start to think that silver is heading down to
$4 again. Conversely, when the price of silver rises, then they tend to think it
must be a bubble. This cycle seems crazy considering the ever-depreciating value
of the U.S. Dollar.
Perhaps instead of
looking at the price, investors could simply open up the COT report and follow
the flow of paper futures and option contracts if they want to know the state of
a currency or financial system.
The Fairy Tale
of Fiat Currencies and National Debts
In the macro
sense, to understand the modern world of debt-based money and ever increasing
national debts, one needs to remember that the shark can never stop swimming
when it comes to printing more paper currency.
watching the stock markets or the Russell 2000, investors can gauge the level of
the underlying money creation process by looking at a country’s annual fiscal
deficit, its debt to GDP ratio, the size of any ongoing monetary expansion or
quantitative easing programs, and the level of its unfunded liabilities.
Price itself may
have become meaningless, but investors seem wrapped up in the speed, drama and
fairy tales told by commentators about a market steeped in self-delusion.
The challenge for
the next generation of silver traders will involve not only understanding and
embracing the concept of purchasing power, but in rediscovering an appreciation
of the true value of monetary commodities like silver as investors come to terms
with producing a meaningful return on investment in a persistently inflationary
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