The Changing Silver Investor Environment

We are going to see a huge shift in silver investor mentality. (By the looks of today’s action it could be today.)  Silver buyers will no longer be “nerdy”guys talking about Austrian Economics or “momentum monkeys”trying to make a quick buck trading metals. It will be wide eyed panic buying as people wake up to the fact they everything they have ever worked for is being destroyed by the massive money creation from the world’s central banks. Once people see that the only answer the bankers have is to print more money and that the only answer the politicians have is to spend more money,  they will see that there is no safe place on earth to store their wealth other than real tangible assets. And of course the best real tangible asset is silver.

I predicted that silver,at one point,would not be available at any dollar price. You can throw away all of your $50,  $100,  $500 price targets,  because society would finally see the enormity of the fraud in the silver market. Once this fraud exposed,no person on earth would dare let go of their silver for fiat paper money. Sure a couple of ounces might be available at the local shop,  but the vast majority of the silver markets will be as barren as the shelves of a post collapse Soviet Union grocery store. This global mentality shift in asset values will lead to a paradigm shift where the world no longer wants debt money. Only real money will do in the new paradigm.

1. Physical investors who have been stacking physical silver will be stunned by the sudden appreciation. It will be akin to someone winning the lottery. They will shocked at the enormity of their new found wealth which occurs at the same time the economy becomes an absolute horror show. A shift in the perception of wealth will confirm that they are holding something truly precious. The years of being told they are crazy for buying silver will finally give way to,  “you were right.”After the shock wears off,  these newly minted kings will seek to make the most off of this once in a life time opportunity. These men were astute enough to buy silver when everyone said they were nuts,  they are certainly now not going to give up what they have for some dirty dollars that they did not want years ago. They will wait for something much,  much better. They will not see immediately many opportunities to invest their new wealth in,  because the final throes of the debt based economy will be horrific. No one will invest when it is not certain what will happen to humanity. They will have no choice but to wait until the act plays out and the music stops.

2. Long term paper investors who have been sitting on the sidelines,  will rush to buy silver this time around. I cannot tell you how many people I know that are literally dragging their feet buying silver. ( You know who you are.) They understand why to buy,  but it is just so hard for them to pull the trigger. Unfortunately,it will not be until much higher prices that they will finally pull the trigger. When they do buy,  they will be joining a fast and furious rush as those fence sitters finally panic for the exits. They will see that Europe’s debt problem,  is the world’s debt problem. We cannot solve debt with more debt. They will see a world awash in more debt/money. They will see that no paper asset is safe with the amount of money printing that will occur this next round of “too big to fails.”This time the “too big to fails”won’t be some puny,  billion dollar company,  it will be trillion dollar nations. I have said that there is quadrillions of dollars in paper assets and only a few million ounces of real physical silver on the market. Right now,  there is probably less than 1% of people invested in silver,what will the price of silver be if it went back to 15% of the population like it did in the 80′s? Don’t forget the last time precious metals went up it was really only the Western nations that participated in that bull run. This time,  it is truly a global reality with China leading the way.
3. Silver retailers will be stunned as people throw their fiat dollar for real tangible metals. Some retailers will celebrate and sell everything they have at higher and higher prices.  They will expect to buy back in at a lower price,  but this time instead of correcting,  it keeps going up. After a short while these former precious metals players will see that the world changed and that they were on the wrong side of the trade. They will then become one of those panic buyers that they once celebrated selling to.
4. The smart silver retailer will see mentality shift of these silver buyers and take silver off of the market. They will see a mentality that is not one of a monetary or freedom “nerds”.  It is not the mentality of a momentum monkey trying to make a quick buck trading metal. It will be one of wide eyed sudden panic that people’s entire life’s savings are at risk and that they need to buy silver (or other real assets.) These new buyers will not be letting go of their silver anytime soon,because they will no longer trust the dollar,the stock market,the banks,or the government. The smart retailer will now see that the real money is not selling the metal,but in holding the metal. The longer they hold it,the more that they may never sell the metal for paper money again. They will join the rest of the strong handed investors that will not sell until there is a new monetary paradigm established or they can sell/leverage their silver directly for other income producing assets.
5. Momentum monkeys,  who play the paper markets on real assets,  will seize upon the new mentality a drive the paper markets higher as they smell blood in the silver short water. Hedge funds will jump all over this market as they seek to squeeze every dollar out of the silver market. Vast paper wealth will be made in a very short time. These momentum monkeys will fail to see that while they were right on the trade but they were in the wrong vehicle. The paper market will cheat them of their ultimate reward of wealth. The mentality shift in asset values that will send real assets soaring at the same time all paper asset markets fail. Even if the momentum monkeys are “right”with their long silver bet…

• there is nothing stopping the CRIMEX from changing the rules for paper traders capping their gains.
• there is nothing stopping a failure of their brokerage account or their bank as the paper markets seize.
• there is nothing stopping  people from not accepting their paper “winnings”for the real physical silver.
• there is nothing stopping the very dollars they “won”from not having any value at all.

6. JP Morgan the ultimate silver buyer? In the final act I do not expect JP Morgan to fall on the sword to defend a failing system. JP along with many other banks know full well the reality of the physical silver market. They have been perpetuating this fraud on a massive scale for years. They have kept the regulators at bay by having their boys actually become the regulators. They know full well that they are trading 100 paper ounces to 1 physical ounces. They are doing this because it is easy money to make now. During this mentality shift they will change with the wind and be first in line for the real metal that they are in control of. These banksters will most likely shift their losing silver short positions on to some other shell company,pension fund,the Federal Reserve or most likely the tax payers. These former silver shorts could ride the physical silver market all the way up. (I may have to change my Blythe Masters Rides The Silver Rocket pictures to ones of ecstasy…)
7. Institutional silver sellers will take their silver off the market. Most people do not realize that the recent depletion of silver on the CRIMEX from 41 million ounces to 28 million ounces has NOT been from people buying and taking delivery of physical silver. It has been from cancellation of warrants of sellers no longer wishing to sell. This is a huge factor from the supply side of silver that will push the price up further.
8. Miners will no longer seek to rush to push more real metal into the paper markets. If they do sell their metal they will most likely sell it in Asia where there will be a huge demand for the metal. These miners will also see that like OPEC or DeBeers,there is great power in restricting output of their product.  Most silver is merely a byproduct of mining other metals. Smart miners would be wise to sell their zinc or other metals and keep their silver byproduct as profit. This silver would grow in value and not be taxed. Since they never sell it,there is no tax on its increasing value. This increasing value would be monetized through the appreciation of their stock price as their balance sheet becomes more and more attractive. (Somewhere,someone is smiling at this thought…)
9. Corporations who were once comfortable with paper contracts guaranteeing delivery of their metal,  will only want immediate physical delivery. Silver is such a strategic metal and is used in such small quantities. There are billions of dollars in corporate valuations at risk if corporations cannot secure the basic components for their products. Companies like Apple computer will whip out the big check book for only the real thing. Corporations will use their power to create a stock pile which will add further demand. Most likely they will bypass the paper markets all together and deal directly with the corporations who mine the silver. What a power shift that will be when tech giants have to go hat in hand to a small mining company to get their metal. Who knows,maybe these tech giants will use their wealth and just buy the whole mining company…
10. Mining nations will make their move. So many mines are in nations that can and will,at the drop of a hat,nationalize mines. Nations will be facing tremendous social upheaval and will not hesitate to steal wealth from the mines that rest in their lands. China once the largest exporter of silver only 5 years ago is now the largest importer of silver. Bolivia was on the verge of nationalizing their mines last May,they could pull the trigger anytime they want. Even in the United States,do you really think the thieves in Washington will not steal the mines in America? Or the CRIMEX or the SLV? Or even it’s citizens?
For the record,I do not think they will go for the little guys like us. First the majority of silver holders are smart enough to hide their silver beyond the sight the Federales. Second,the majority of silver owners I know are former military,gun owners who don’t trust the government. They would never willingly give up their silver anymore than they would give up their guns,food or children. If they won’t give it up,what are they going to do send in the SWAT team to grab some Mercury dimes? Finally,I believe that the government will have much bigger problems on its hands with riots and starvation to mount any effort for confiscation. All of this assumes that these bozos even understand how important silver is.
11. The Anti-Hegemon makes it’s move. I have written that there is a group of nations that have not benefited from the current world order and are seeking a way to end it. They have been very wise to not agitate the mortally wounded beast of the Anglo American Empire. They have been sitting on the side lines sharpening their knives waiting for the right time to carve up the remains. China is leading these nations with their huge reserves and the opening up of new markets like the Pan Asian Gold Exchange and the Hong Kong Mercantile Exchange. These nations have been using their paper assets to buy real assets all over the world. China is now in every continent buying oil,farms,and mines. They do not waste their wealth on frivolous showcase properties like the Japanese did when they bought golf courses and Manhattan sky scrapers. They are buying assets that will be the basis of power in the new paradigm of real wealth.
This mentality shift in real asset values will ultimately lead to a paradigm shift in power. Those that have the real assets will be the ones making the rules. Those investors who hold the physical metal will finally have the upper hand over the paper manipulators. Those miners will finally become more valuable then these frivolous companies like Facebook. Those nations that have the natural resources will have the upper hand economically over nations that have nothing else to offer but debt and death. This shift is power will be from those that produce nothing to those that produce something. Reality will take hold and the day of something for nothing will be over for good.
When the game changes you will see that the counter party risk becomes the most important aspect of investing. Paper assets rely on another party to fulfill their end of the bargain,real assets do not. When the world is panicking,  it will be every man for himself. There are many more powerful people higher up the food chain that will get theirs before you get yours. A very wise man,Ponce,once said. “if you don’t hold it,  you don’t own it.”When this shift happens,  will you be in the right place,  at the right time? Got physical silver?