The Phaserl


Learning to Prosper in Silver – Jeff Nielson

by Jeff Nielson, Sprott Money:

We live in the era of the sound-bite. In
our televised news, every subject – no matter the complexity – is presented in
two minutes or less. Our newspapers are the print equivalent of the sound-bite.

TV programs exist which present longer
discussions of important subjects. News magazines exist which provide longer
print features. But no depth of understanding is gained from such sources.
Instead, we are simply bombarded with an agenda: the agenda of the handful of
which control (virtually) everything we see and hear.

For these reasons, most consumers of
information have no time to invest in “learning”. Feed them the bottom-line, or
stop wasting their time. Unfortunately, such an attitude will not get one very
far when investing in silver. Think of silver as a wild bronco. Learn what
you’re doing
before you climb on, or
you’re virtually guaranteed to take a nasty spill.

Why? Why is the silver market a difficult
(and dangerous) market for novices to attempt to navigate? In a word,
manipulation. The facts speak for themselves.

At the end of the 1980’s; the price of
silver was driven to (in real dollars) a 600-year low. While that final crash
in price occurred in relatively recent times, as that chart above indicates,
the assault on the price of silver began over a century ago.

Prior to that, for over 4,000 years; the
gold/silver price ratio averaged 15:1. This is no accident. The supply ratio of
silver to gold (in the Earth’s crust) occurs at a natural rate of 17:1. For
over 4,000 years; the price ratio has closely paralleled the supply ratio – for
these two precious metals.

Then the attack began. Readers wanting to
learn about the early era of silver manipulation can learn most from Charles
Savoie’s detailed chronology,
Silver Stealers
. After 4,000+ years of rational consistency in the price of
silver and the gold/silver price ratio, we see that ratio being skewed beyond
any rational extreme – at times exceeding 100:1.

In the years between the beginning of the
attack on silver and the present day, silver has become steadily more useful to
humanity – even
more “precious”. What
was the effect of dramatically manipulating the price of silver lower in a
world that still wanted and needed silver?

Simple economics gives us the answer. At a
radical price discount, silver was wildly over-consumed. Meanwhile, as the
price went lower and lower, less and less mining companies could afford to mine
this metal at a profit. By the time silver was driven to its 600-year low in
price, and held there, more than 90% of the world’s silver mining companies had
been driven out of business.

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