For those with a good memory, this is the promised follow up to my piece on the manipulation of the silver market and its very scary ramifications. Before we get into the possible end-of-civilization-as-we-know-it details, a recap is in order. Andrew Maguire of London blew the whistle on JP Morgan Chase's very likely profound manipulation of the silver market to the CFTC. As financial government watchdog agencies are wont to do these days, they did their best to sweep it all under the carpet. How the SEC handled Bernie Madoff's Ponzi scheme is a prime example of this. This matter is not a Ponzi scheme, but it is the largest scam ever, going into the trillions of dollars territory. But back to Maguire, who was quite determined to clean up the business of commodities trading. He goes public with powerful compelling evidence of JP Morgan Chase's manipulation of the silver market. This happens on a Kingsworld radio show. The next day someone tries to kill him by ramming a car into Maguire's car. Maguire and his wife, who was also in the car, are hurt pretty bad but survive. After this, in their infinite wisdom, the commodities watchdog the CFTC decides to have a meeting with most of the key players in commodities trading but exclude Maguire from attending. At this meeting a secret is revealed that could easily tear apart the fabric of our barely functional financial system. The secret is that for every 100 ounces of gold and for every 100 ounces of silver traded on paper there is only one actual ounce of gold and one actual once of silver to back up these trades. Given that yearly there are trillions of gold and silver traded on paper, this is the literally biggest scam in the history of scams. Now the guy who let this cat out of the bag didn't think it was a big deal, using the logic that as long as the buyer was paid the value of his purchase at the time he wants to sell it doesn't matter if his purchase was backed up by an actual commodity. This cavalier attitude does seem to reflect the mindset of people working in our financial system that everything is smoke and mirrors except the money being exchanged.
It is quite possible and even probable that someone with enough financial resources and the will to do it could turn our financial system upside down and make an enormous profit from it. This person would have to have no loyalty to western currency and the financial well-being of western countries. So let's assume a very wealthy Asian wants to take a shot at getting into Bill Gates' wealth status. From what I gather, the game plan would be a simple one. That is, buy enormous amounts of what I like to call the paper version of silver and gold and buy even more actual silver and gold. Then start a run on Comex by demanding to replace your paper with actual gold and silver. The next part is for me admittedly a bit fuzzy, so my play by play of this could be off a bit, but I believe the general idea fits the situation. Given that commodities' trading is a relatively small community, if the player of this scenario has purchased enough of these metals and starts demanding their paper be replaced with the real thing, their demands should cut fairly deep into Comex reserves and then the rumor mill will kick in big time. It shouldn't take long for the word to get out that there is more paper of gold and silver out than actual gold and silver exists to back it up. Once this gets on the street it should not take long for the Comex reserves to get wiped out. Then financial chaos is right around the corner. However as chaos swirls around them, those that possess actual silver and gold will see their investment shoot up, perhaps skyrocket in value. I believe a conservative estimate would be to rise anywhere from two to four times in value. However given the volatility of anything financial these days I fully expect it to zoom to five to ten times in value.
That's the good news if you are sitting on actual gold and silver, but the bad news is really, really, really bad because the basis for all valuation including the stock market, the dollar, the euro, etc., is gold and silver. Remove silver and gold from the valuation process, and as one financial analyst recently told me, the stock market probably drops to 25 percent of its value the dollar probably loses 30 percent of its value and so on. These figures are guesswork and possibly conservative, but what is not a guess is that the value of stocks, the dollar, the euro and more will lose big chunks of their value enough to throw our fragile financial system into chaos. The value of silver and gold are bedrocks for building the valuation of currencies the stock market and other financial entities. Remove a bedrock and the house comes tumbling down, or at least a good part of it, probably most of it.
Financial Armageddon anyone? Sure we have already looked that bullet in the eye and dodged it. However, many financial wizards have predicted it could still occur and none, as far as I know, took into account the wipeout of the silver and gold reserves. However back to the gutsy whistleblower Maguire -- he was scheduled to be interviewed back when all this broke out by all the big news outlets. However, quite suddenly all of these major media sources canceled these interviews. So unless someone you know who is into the silver market brought this to your attention, it likely went completely under your radar. Presumably, the government. the wolves of Wall Street, and every other financial player who has a lot to lose are working hard to keep this on the way down low for as long as possible. I can't really blame them for this given the impending catastrophe revealing this secret will release. However, the trigger for all this going public is likely the DOJ and SEC's investigation of JP Morgan Chase's manipulation of the silver market. Once this investigation comes to a close there has to be some consequences which the media can't completely ignore and then the stink storm hits the fan for most of us and for those that own silver or gold their personal value jumps up quite a bit.
Between silver and gold, silver gives the much stronger appearance of giving an investor a more viable short term reward. Since the DOJ and SEC started investigating JP Morgan Chase's very likely manipulation of silver, you no longer see silver pushed down hard after it has rallied up. In fact an interesting phenomenon has taken place recently regarding silver. Silver and gold used to be joined at the hip in that both would go up and down together as a matter of course. However, silver has continued to go up regardless of when gold goes down. Even more remarkably, silver has recently continued to go up even if the stock market goes down. This shocking behavior of silver only strengthens the case that JP Morgan was manipulating the silver market. That the silver market has such staying power is not really surprising given the big picture of high deficits, a weak dollar, a weak euro. Silver stands out as a relatively safe investment perhaps the safest investment anyone with a some extra money can make. Right now its just under $20 an ounce which is a whole lot more affordable for the average person than gold at around $1250 per ounce.
Obviously, if any of you readers have some money and you can afford to sit on for 6 to 18 maybe 24 months, it is my opinion that buying actual silver or gold especially silver is one hot investment. I suggest this time frame because I suspect within ½ to 2 years the investigation of JP Morgan Chase's obvious manipulation of the silver market will be concluded and made public. The government will no doubt drag this out as long as they can which is why I foresee this possibly lasting a good 2 years. It's also possible that within that time frame, some enterprising filthy rich person is willing to blow up the silver and gold market to make to make themselves super rich.
I wouldn't just take my word on any of this. If this subject grabs your interest I strongly recommend you listen to an interview between Andrew Maguire and Adrian Douglass of GATA. GATA is the Gold Anti-Trust Action Committee and was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities. When you hear these two speak about the inevitability of the biggest fraud in the history of man being exposed you cant help but feel that its just a matter of time before what I like to call the big bang hits our financial system. One of the questions Douglass asks Maguire is why it was allowed to happen that we now only have 1 ounce of gold and 1 ounce of silver to back a 100 ounces of each that is being sold on paper. As I recall Maguire thinks it happened because at a low point it was a quicker way to juice the financial markets and eventually it all just got way out of control. I see a parallel in the steroids era of baseball and sports in general. After the baseball strike put the sport in a dark period, the lords of baseball looked the other way while some players juiced themselves up so they could hit more home runs in one season than had ever been hit before. This created a major buzz for baseball and quickly took them out of this dark period. However when the stink hit the fan baseball would be forever tarnished and would never be the same.
Apparently the fools that run our government and our financial world also looked the other way and took the short term upside gambling against the long term loss. The question begs to be asked if and when this big bang hits given all the other bullshit that the protectors of all financial have allowed to be fostered upon the general populace, will said general populace ever again trust the members of the Fed Reserve, big banks the Secretary of Treasury etc etc ad nauseam ever again. There sure isn't much left to trust so this new catastrophe ought to really wipe out any vestige of trust the peons of Main street still have for any and all of the big financial players. I doubt if this will lead to people stuffing cash into their mattresses but it will probably lead to the creation of more state run banks like the one that now exists in Montana.
To any of you who read my first piece on the silver market please accept my apology for not keeping my promise of following up right away with a second piece. If you care for an explanation, at first I delayed because the BP oil spill seemed like more than enough of a major downer for everyone to handle and I didn't want to pile on. Then I got distracted and lazy. Now after a two week vacation I feel renewed enough to finally keep my promise. Hope it was worth the wait.
Lastly a note of caution given that I am recommending you readers to spend your hard earned cash on an investment, for those thinking of jumping into buying silver or gold or any investment, when contemplating making any purchase especially big ones, there are two lines not to cross. Crossing these lines is a leap from risk taking to gambling and I strongly recommend you don't gamble with your money. In my considered opinion an action becomes a gamble when you risk something you can't afford to lose like betting your rent money. The other line not to cross is taking unnecessary risks. I am not suggesting you should live like you are in a straight jacket but with money it's usually best to be cautious. Taking lots of unnecessary risks can become as addictive as betting on the ponies or sports. The reason for this is both give you an adrenaline rush. The more someone takes unnecessary risks the more likely they will get burned. With that in mind please be conscious, be cautious be smart and pick your battles or risks wisely.