by Dr. Jeffrey Lewis, Silver Coin Investor:
At this point in the cycle, the silver market should be relatively easy for the average person to enter. Prices are beginning to move back toward natural supply and demand equilibrium, as large disruptions are occurring between the positioning of dominant futures speculators that have kept futures prices entrapped for nearly 6 years.
It’s easy to buy physical silver right now. It can be bought in person.
It can be through online dealers.
Relatively speaking, it requires relatively few ‘currency notes’ to acquire its cheapest form (closest to its commodity state) in the form of bullion or rounds, and silver that previously circulated in the currency otherwise known as 90% silver or ‘junk silver’.
But when you actually hold silver, it changes things.
It becomes not just ‘skin in the game’, but real weight in the game.
And then it becomes a little more complicated in that physical silver needs to be stored, watched, protected.
That often divides the landscape of potential investors.
Why get your hands dirty if you don’t have to? Why hold physical precious metals in your possession if there are other available (less burdensome) methods for storage, or options for exposure?
It’s similar to how some generations view farming or growing vegetables at home as unfashionable or a primitive practice for the underprivileged.
At the same time, all of this effort leads to somewhat of a “feedback” awakening.
A reminder of perhaps the factors that lead us to thinking about silver as a safe haven investment to begin with; as a protection against inflation, or in some cases, an opportunity to make money and ‘profit’ over the short, intermediate, or long term.
Currently, there are no significant retail shortages, though some forms have experienced notable cycles of retail scarcity over the last 10 years.
Obviously, this can change very quickly on a sudden surge in price, as the would-be retail investors awakens to price action.
Outside of the matrix of predictions and emotion, anyone can learn about the fundamentals of silver on the Internet.
Much silver information is disseminated through retail bullion dealers, producers, large industry consulting groups (World Gold Counsel) the chief US futures regulator (CFTC), The Silver Institute, and various exchanges and trading platforms.
These channels might be considered the ‘high-road’, because aside from a few prominent bullion dealers, there is a built-in incentive to quietly ignore the true nature of world price discovery.
If price discovery were revealed for what it is, many of these institutions would cease to exist. (More on that in a moment).
Silver, for the mainstream inventor/observer, is therefore relatively easy to ignore and has only a very small, yet vocal group of “grass roots” advocates, bloggers, newsletter writers (some part-time, with day jobs like me), or analysts.
Compared with equities, foreign exchange, options, and even futures, there are relatively few (if any) ‘professional’ analysts who focus mainly on silver.
At best, most so-called ‘professional’ analysis of silver is lumped in with the other precious metals.
In addition, silver is ‘rationalized’ and evaluated from a derivative-based, technically driven price function that at best, secondarily informs on supply and demand – rather than the other way round.
This informs and cultivates the prevailing mainstream (lack of) awareness.
Silver, in the minds of the ‘intellectual class’, represents jewelry or silverware with only a very detached recognition of its role as currency and money throughout the years.
In most cases, it is (misleadingly) lumped in with it’s yellow cousin.
The average Joe is essentially oblivious to great silver option.
There is of course, an undeniable political climate that hangs over the opportunity. Silver is certainly not progressive in the minds of most.
In fact, if the metal is understood from a historical standpoint it is relatively benign, if not interesting to the laymen.
What silver might represent from an investment or monetary hedge comes across as a very regressive position, where seeking safety is considered conservative.
This can be dangerous in the current cycle of humanity, where hope for progress as the ultimate salvation is worshiped while the foundation for prosperity (economic, social, cultural) visibly unravels.
(The great irony is that silver is essential to the technological progress they worship).
Many arrive at precious metals looking for an investment alternative. Some come for protection from inflation or currency collapse. Many imagine silver as an useful currency, in addition to a basket of others items stored for emergencies. Many also arrive here in the aftermath of the serial booms and bust brought forth by sanctioned financialization.
While guarding wealth and maintaining purchasing power sounds prudent enough, most silver investors cannot help but see a huge option for significant monetary gains.
From whatever angle, just below a surface understanding, lies the recognition that it is nearly impossible to find any other investment vehicle so ridiculously underpriced. Silver is not only under valued in simple inflation-adjusted terms, but also in terms of visible (verifiable) supply and demand.
Digging a bit deeper we encounter the murkiness regarding paper versus physical silver.
And further we eventually uncover the currency or the yard-stick used to value practically everything, the empty fiat currency promise.
In the background to all of this is the primary mechanism of price.
Enter price manipulation.
With silver, you also have a relatively easy commodity to control because, along with other commodities, it’s price arises from pure speculation on futures markets.
The reason why it’s easy to control is that relatively little collateral or a lot of leverage can be gained with very little money down in these markets, so large entities, speculators, can afford to manage price at a relatively low cost.
In terms of price manipulation, if you have control over the price, you can also, of course, leverage those positions for profit, profit that is very easy to look back and notice is a very consistent thing if you are the one controlling the price.
This conveniently fits with the higher order agenda required for maintaining ‘confidence’ in a currency by preventing anyone from knowing the relative value of anything.
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