Happy Cinco de Mayo mi amigos! (Sorry, this was last week’s newsletter). As you are all most likely aware, today is the day to celebrate drinking beer and eating fish tacos…and oh yeah, the Mexicans defeating France in 1862. But never mind that nonsense; let’s have another pitcher of Dos Equis.
This is how most Americans now feel about the US economy in the age of quantitative easing. We are busy celebrating the windfall profits from the stock market and forgetful of the seriousness of the events surrounding us every day.
Basically we are partying hard without any regard for the consequences.
We are also busy celebrating the death of one of this century’s biggest criminals and the media is heaping praise on the Obamessiah for delivering us from this evil. Let us not forget the hard and dangerous work of the few Navy Seals who actually did the work and put their lives on the line regardless of your views on war.
To me though, the biggest story this week has been in the precious metals market and especially in the silver market. Manipulation anyone?
Silver and gold, along with most other commodities, have been rising in price over the last year or so for one primary reason – quantitative easing. You cannot flood the economy with this much new cash in such a short period of time without seeing a surge in commodity prices.
The very definition of inflation is when the money supply grows faster than the supply of goods and services. In other words, you have a lot more cash buying the same amount of goods and services. There is no other way to go but up for prices.
Silver and gold have served as real money for thousands of years. Historically, these metals have been the ONLY real money that has survived since the beginning of time.
With gold prices going upwards of $1500/oz, it is only logical to see people flock to silver as a real store of value; true savings if you will.
Now that is seems we have a ‘black swan event’ of the week, the turmoil has caused investors to flock to real money – silver and gold. Certainly this causes upward price pressure just as in any other supply and demand situation, so why are we seeing the severe drop in silver prices?
Well ladies and gentlemen, welcome to price manipulation 101.
With the dollar in a permabear trend, Geitner and Bernanke have been gorging themselves lately on a diet of crow while constantly wiping the egg off their faces.
Do we all remember these guys telling us repeatedly that they support a strong dollar policy while at the same time printing more money than what is held in the vault at the Bank of God?
It seems these guys have had enough of grilled, fried and boiled crow so they place a few discreet calls to a few discreet men, and voila – the margin requirements on silver are dramatically raised.
With the exchanges dramatically raising the margin requirement on silver, a lot of investors who were hedging their dollar exposure in silver futures are now getting out. Of course this drives down the price of silver and gives a major lift to the dollar.
For the ignorant, unwashed masses that drink the political cool aid, it seems Bernanke and Geitner are doing their jobs well by supporting the almighty dollar. In reality they had to call in some favors and let uncle Vinny make a few house calls to rein in the inevitable collapse of the greenback.
I truly hope you are watching these events unfold and using your own critical thinking skills as opposed to watching the talking heads on the news tell you what the gods of media have whispered in their ears.
We are living in the ‘Great Reset’. It’s unfolding in front of our eyes. The tides are turning. The walls are coming down. The king is wearing no clothes. Pick your own metaphor, but be warned, now is not the time to sit on your laurels and just wait and see.
Now is the time to develop your own asset protection plan. Now is the time to make sure your skills are going to be valuable in the decades to come. Remember, when turmoil exists, opportunity persists.