Political Metals

Made in America. Source-Lemetropolecafe

12% in 9 minutes! How does a precious metal lose its “preciousness” so rapidly? That was how silver’s “price” nose dived in the early hours of Far East electronic trading on May 1, when most markets were closed for Labour Day holiday.

Not to be outdone, the other precious metal also showed its ability to lose its shine in a matter of seconds, illustrated in the chart below, about 24hrs after the silver action.

Paper versus Metal. That’s how to make sense of these price actions. These charts reflect the spot prices of the paper gold and paper silver market. Conducted through electronic exchanges using High Frequency Trading (HFT) algorithms, not unlike how most stocks are traded these days, these price actions mean very little to those holding physical gold and silver as a store of value rather than an investment. They mean little if you use ounces of PMs instead of dollars as a measure of wealth.

Political versus Precious. No. Physical gold and silver did not lose any of their “preciousness”, much less lose any value like how these charts would have you believe. They were painted by the powerful and political hands for purposes discussed here, here, here and all over this site and many other sites recognizing that gold and silver prices are constantly being manipulated. Over a short time frame, they are able to paint the tape anyway they like. Don’t be surprised to see violent $5 - $10 short term swings in silver prices. Over here at PoliticalMetals, we just call them Political instead of Precious.

For readers who are still contemplating exchanging paper currencies for hard currencies, these price actions during this period of extreme volatility is akin to a “One day sale, everything must go at a 20% discount” store advertisement.  Should you buy into today’s “Sale” or should you wait for a “Bigger Sale” ahead? I can’t make that call for you, but can point you to “experts” out there. All I can say is that mid term to long term, the trend is UP.

The Big Question: Silver Might Crash?

YES: We believe that the market has been exhibiting the precursory signatures of power law behaviour, and that the internet power law of participation phenomena has produced a point of criticality whereby we have seen the top in silver for this half of the year. We believe a real shake out is imminent, in the order of $15 dollars over 3 to 5 days. Ben Davies, CEO Hinde Capital

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NO: JP Morgan will ultimately fail trying to keep silver price from rising above its stock price. JPM has used its own stock to collateralize naked shorts against Silver. The current struggle to break free of the JPM stock price was anticipated. This level will fall and then the $50 level will be taken out quite quickly as we march toward $500 and the collapse of the US dollar. Max Keiser

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Read Two Sides of a Coin for sources of these quotes and for more forecasts from industry analysts.

If you’ve decided to take the plunge, check out some Buying & Storage Options.

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