I’m starting to warm up to the idea that the fraudulent silver price fix on the LBMA a couple weeks ago marked the final “capitulation” of the nearly 5-year price pullback in silver and 4+ year pullback in gold. We have yet to hear a satisfactory explanation from the LBMA for the exceedingly odd price behavior of silver seconds before the a.m. London silver price was set on January 28th.
I believe that event marked the “last gasp” effort by the highly corrupt LBMA bullion banks to shakedown the physical silver market in order to get their hands on as much physical silver as possible at as cheap of a price as possible. I believe, not uniquely by the way, that the synthetic short interest (paper derivatives shorts) in silver is even worse than for gold, which we know is at least 100:1.
Big banks hate losing money and will do anything – legal or illegal – to avoid losing money or to minimize losses. I saw this first-hand and peripherally participated in activities designed to minimize losses when I worked on Wall Street in the 1990’s. Everything is worse now in that regard and the people who are supposed to enforce the laws and oversee trading activities at these banks are now in on the corruption.
With that as the preface, I believe silver is beaten down and cheap relative to gold and any other investment alternatives and I think buying silver now – at it’s current price – will prove to be the trade of the decade.
Right now gold is outperforming silver on up-days BUT silver outperforms gold when the metals sell off. Typically gold will outperform silver in the early stages of a big bull market move. Gold current outperformance vs. silver is reflected in retail activity, as noted by Doc at Silver Doctors and some other bullion dealers to whom I spoken about the market recently, in which sales volume of gold coins is outpacing volume in silver.
But this will soon crossover as gold appreciates in price and waves of new buyers flock to silver rather gold because it feels better to buy more ounces of silver than gold. Silver is poor man’s gold and always has been for 1000’s of years. When this dynamic kicks in, the gold/silver ratio will drop quickly from its current 78x. I suspect before this bull market is over, the GSR will drop well below 20, if not 10.
We saw this in 2011, when silver began to go parabolic before the western Central Banks had seen enough and began to throw 100’s of tonnes of paper gold and silver at the market in order to not only prevent the metals from moving higher but to beat down the price on gold and silver to their current levels. In the bull move from late 2008 to April 2011, the GSR dropped from 100 to 32.
Eric Dubin and “Doc” hosted me for their weekly metals and markets podcast last week. We discuss a range of topics but focus on the precious metals. Note: I mention a new emerging junior exploration silver miner that I featured in a recent issue of my Short Seller’s Journal. Anyone who subscribes to the SSJ and mentions that they heard about it on the Silver Doctors podcast will receive a copy of that back-issue when they subscribe:
The statements, views, and opinions expressed in this article are solely those of the author and do not necessarily represent those of EMerging Equity.