Silver $39/ounce Tomorrow

Doug, the hyperinflation in Zimbabwe was not due to factors which one could truthfully say are in play in the US. It was due to insurgents within the country, Falsification of financials at all levels, mobilization of a huge ( proportionally ) army with high wages to insure loyalty, Land reforms to take land and businesses from successful people and give it to those who had no training nor incentive to produce internal resources. Due to the military and the lack of resources, people lost confidence in their own money ( it was internal ). Anyone attempting to use gold or silver would have a throng of people following them home to "tax" them the full value.

The other examples may follow more your logic, but the last sentence above would still be true. PM are nice if you never have to use them. I don't care how many guns or bullets one has, there are people in power who would have more. IMO.

Jim

 

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Doug,

Whether the greenback hyperinflates or not has absolutely nothing to do with the conversation on whether fiat is real money or not.
Money can hyperinflate, so I have no idea what your point is.

 

About time! lol

 

I agree with use of PM but disagree on your point of gasoline. Stated in terms of inflation adjusted dollars, gasoline is not out of line at todays pricing if you go from the 50's to today. What happened was the 90's were artificially low for all commodities.

I have said it before, you cannot expect a FRN to retain its purchasing power. It is not designed to be held for 30 years and retain its purchasing power. BONDS are designed for that function. If you would have bought a bond in 1952 and cashed it today they would buy roughly the same amount of gas in either era. Yes, so would have PM, but that only serves to illustrate my point that BONDS are the real "dollars" you need to measure with over time versus other commodities.

Btw, tripling in 20 years is not hyperinflation. Think more like ALL PRICES tripling in a couple of years, or just a few months.

 

LOL.

The past tempts us, the present confuses us, and the future concerns us.

Your "insider" is not to be trusted.

 

FAIL

You still got your receipt for that crystal ball?

 

Even with the uncertainty of the elections behind us, it is still in the best interests of GLD, SLV, and other PM participants to suppress the price, since the big banks have an enormous short interest to deal with, and rising prices would of course generate huge trading losses.

IMO, you won't see a surge in PM prices until the European stock markets tank. And since they are creating Euros out of thin air to prop things up, it's hard to predict the when and where.

 

What none of us know or can know is whether or not the bank short position is a naked short position or just a basis trading program carried out on behalf of clients that actually own the bullion to back the trade [think China]. In that case, there would be no trading losses or need to either supress the price or fear a liquidation of the position.

 

That has always been my view. If I owned large quantities of silver and had no idea of ever selling it, (think foreign countries), I sure as heck would lease it through a bank and at least generate some revenue from the holdings. Why wouldn't you?

Knowing that, exactly how much is this going on? To the extent this is happening, to the outside it would appear banks are naked shorting when in fact they are taking no risk whatsoever. To me, its simply another aspect of the market outsiders may not understand but rail against in blogs about "market manipulation".

 

Yes. The banks aren't always crooks and they aren't alway speculators or manipulators. Sometimes they are just acting in a very old fashioned bankerly manner to earn money for clients and collecting their fee for it. It is impossible to know this because it isn't public information, but it makes more sense and would be a much easier game for them to play. Therefore, it deserves more consideration than it has received. The burden of proof lies with those who claim it is manipulation.

 

The only product that an investment bank has to buy and sell, is risk. They sell risk to their clients, and place bets on it themselves. So I'm a bit confused by the statement "take no risk whatsoever".

 

Well silver is moving up as of this post. Now up to 39 would be great!

 

When the bank undertakes a trading program for a client, it is the client that takes the risk and the bank gets paid for doing the work. And when/if the position is fully backed by physical silver, it is as risk free as, say, a short term triple A bond.

 

But it's still risk which they hope to make money on.

The risk, at a minimum, are the holding costs of storing a vast amount of silver as well as the opportunity cost of the actual worth of the physical silver.

 

Everything in life is risky. In fact, it is so risky that nobody gets out alive. My understanding of basis trading is that the client pays for holding costs and bears the opportunity cost. The bank is in a position similar to a mutual fund manager collecting fees for service.

 

Who said they were keeping that risk Fatima? A bank's best position would be to sell both sides of the position and just keep the fees. That in my experience is what banks prefer to do. Why take a risk when they can just sell both sides and have guaranteed, riskless profit.

I guess I am a bit confused when you say they "place bets on it themselves". Some rogue banks have done that in the past, and many of them today are out of business. A prudent bank tries to sell both sides of a transaction and just pocket the fees, (at least the ones who stay in business do).

 

Easy answer. Amount of the reward. Why does a person risk money in the stock market instead of keeping it savings?

Lets keep in mind that we have two kinds of banks in the US. First are the retail banks which make significant amounts of their revenue via fee collection doing what you suggest. The second type of bank are investment banks which make bets on risk in hopes of making very high profits for the clients and owners. They are not in the business of fee collection even though they do collect fees. Eliminate the risk business and you eliminate the reason for investment banks to exist.

In the discussion of silver manipulation of silver shorts via naked shorts, we are only taking about the investment side of the business.

 

Are we back to the secret invisible conspiratorial naked shorts ??

 

Haven't you heard? It's been going on for 40 years to hold down the price of silver. :dead-horse:

Of course, the simple answer is that maybe most of the shorts aren't naked after all.

 

But so far no evidence has been presented to show that the short positions are naked. The investment side of the business does have clients you know.