Silver 2011, A Look Back: How Silver Made a Run at its Record in Dollars, Only to End The Year Down As Euros Became Dollars

by Enviot Von Beardio

Oh, here we come to the end of another year of currency wars and U.S. led genocidal invasions of far away nations. If there was any doubt in anybody’s mind that Obama would forge ahead with the Bush pre-emption policy, this was laid to rest in 2011.

As insane policies by bankers and special interest technocrats lead to a loss of faith in fiat currencies generally, the precious metals markets have awoken from a near century long manipulated rest. Asserting themselves increasingly as the money of choice among savvy investors and a deep-seeded freedom movement, the future of money does not lie in the U.S. Dollar. Silver, in particular, has become an exciting prospect for the younger generation, many of whom purchase silver not as an investment, but, rather, as a store of wealth or means of savings. Those who affiliate themselves with the Silver Liberation Army, furthermore, see it as a weapon against demise-of-the-state globalist banks.

In late 2010, silver made exciting moves. Moving from $18-$31 an ounce from August-December, individuals were given a taste of what was to come the following spring. Before making its parabolic run in April, silver would pull back a bit in January, thus shaking out some of the market’s weaker hands. To be sure, despite this January dip, silver had not broken below quarterly moving averages, and certainly had not come close to that $18 price. For that reason and others, many were predicting an end of the year silver price of approximately $45-$50. Then, they thought they had gotten it way wrong, from the underside, when silver tested $50 at the end of April.

In January, reports surfaced that Eric Sprott was having trouble locating silver. Plus, Harvey Organ reported in early January that the Central Fund of Canada had not added to its inventory of silver and gold. Increasingly, people were taking valuable gold & silver out of the market and the clutches of central bankers.

That same month, newsletter writer Bob Chapman, of The International Forecaster wrote that there was a “distinct” possibility that the US Treasury had little, if any, of the gold it claimed to have. John Williams argued that, when real inflation since 1980 was considered, gold should be trading at around $7,700 an ounce. Bob Chapman stated his staff and he believes silver should be trading at more than $100.00 an ounce. He wrote this on the heels of a gold and silver “mini correction.” The International Forecaster also states:

…Again 95% of newsletter writers, analysts and economists were wrong. As we say, go long and stay long. These fools continue to try to justify their existence. As you can see the US government, JPMorgan Chase, Goldman Sachs, Citigroup and HSBC cannot hold prices down for more than several days. The physical demand is overwhelming.

Chapman goes onto elaborate on the then incipient Max Keiser, “Crash Banksters, Buy Silver” campaign. He suggests it is working. The movement was not envisaged by Max Keiser to literally bring down JPMorgan, as much as it was to bring to light the rampant corruption the banking institution applied to the commodities exchange. Later in the year, as MF Global collapsed, reports would surface that the exact amount of silver missing from customer funds at MF Global, turned up at the JPMorgan operated COMEX vault. JPMorgan became first-in-line for bailout funds in the wake of MF Global. In MF Global, the world witnessed another financial assassination in a financial war that leads towards increasing power consolidation.
Scant spoken, in April 2011 the price of silver rose above the price of the JPMorgan stock price, what amounts to a psychological victory for those in favor of historically based money in the S.L.A.

By mid-February rumors were cropping up on the internet claiming that fine silver bullion was further and further out for delivery. Silver would indeed become backed up for weeks, from Hong Kong to New York, in the spring.

In early March, the political status of silver in Utah sparked excitement in many fans of the poor man’s gold, silver. On March 4th, Utah took the initial steps towards a gold standard when the state House passed a bill that would acknowledge gold and silver coins issued by the federal government as legal tender. This means the Gold and Silver Eagles produced by the U.S. Mint. The House voted 47-26 in favor of the legislation which also exempted the sale of gold from the state capital gains tax and calls for a committee to research possible alternative currencies for the state. The use of the coins would not replace any paper currency, but would be used as a voluntary option of payment.
Backers of the bill in Utah said they wanted to send a message to the rest of the country.

“People sense that in the era of quantitative easing and zero interest rates, something has gone haywire with our monetary policy,” said Jeffrey Bell, policy director for the Washington-based American Principles in Action. His organization helped to shape the bill.

“If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington,” he said.

By March 24, silver reached as high as $38.17, but did not close above $38. At the close of March trading, silver closed at $37.87—the highest month-end price ever, ignoring inflation.

In early March, upon release of the Commodity Futures Trading Commission’s monthly Bank Participation report, it was clear that the largest 1-4 banks with positions in the COMEX silver market had increased their net short position by 30 million ounces. Of course, JPMorgan Chase most likely owns most of this short position, as has been reported by multiple sources. Also, tens to hundreds of millions of ounces of silver due for delivery to fulfill maturing COMEX March 2011 contracts were settled with little silver actually removed from COMEX warehouses. Of course, these keystone banking institutions in the shorting silver business did everything they could to settle the contracts with cash, probably paying in excess of $50 per ounce.

Foresight of the parabolic move up in silver became rampant on the internet by mid-march 2011. Charts such as this one were presented in mid-march so as to demonstrate the possibility for silver over the coming weeks and months:

For the chartists, the price movements leading into March 2011 looked similar to the silver price blow-off of 1978-1980, which sent silver to $50 an ounce—a price still yet achieved 31 years later.

At that time, in mid-March 2011, the dualism of market predictions indicated that the price of silver was going to result in one of two things: either an end to the spike of the last 2-3 years or a base formed on which a parabolic price movement would build. Sideways movement would be highly unlikely unless the market were faced by unprecedented price manipulation. It was indicated by many chartists that, in order for a price spike in silver to build a formidable foundation, gold would have to breakout of its $1400-$1450 range. This would indeed happen, as by the end of April, after silver broke-out from around $33 an ounce all the way to just shy of $49.70, gold had reached as high as $1539. At that time, the dollar had dropped for four straight weeks against a basket of major currencies and China had signaled that it would be diversifying its reserves into precious metals.

An important theme in April was a closing of the gap in the gold:silver ratio. By April 4 the gap was about 37:1. By the month’s end, the ratio had targeted 30:1. This price run up, which had silver flirting with $50 an ounce was the start of great long-term volatility. In April, except for the end, there was little volatility and the market moved consistently to the upside. By the low to mid $40 range, $50 began to seem like a reachable target.

As silver came closer to the $50 psychological record, mass media began trumpeting it, most likely in anticipation of the coming blood bath. On April 25, Reuters quoted Hakan Kaya, commodities portfolio manager at Neuberger Berman, who bearishly said: “Silver has transformed itself from an inflation hedge to a speculation tool…At current prices, we find it highly overvalued with no fundamental reasons backing it up.”

Kaya offers up an offhand analysis, submitting that the silver had been somehow “transformed,” although it had long been a speculation tool, as made obvious by the enormous silver shorting going on on behalf of the ruling international banks, in particular JPMorgan and HSBC. While true that silver speculation had increased considerably in the aggressive April run-off, speculation was nothing new to this market. To his credit, he did foresee the move in silver being unstable and due to a correction in this extraordinary, secular bull market.

By April’s end, though, the silver market had transformed itself into a frothy killing field. And, in the slim markets of early Monday Asian trading, which opens up on Sunday in the U.S., enormous sell-offs continued from the end of the following week.

The climactic top, however, was clear when one recognized the market was seeing record volume, just like in November of previous year right before there was downside action in silver. The ten-day moving average of $42 was to be quickly found before silver tumbled still into May. Of importance to note is that, in the high-forties, the silver price was all over the map in a chaotic manner, thus foretelling of its coming collapse.

Silver was in for a shellacking, receiving 3 margin increases in 5 days from the CME, who is in charge of futures (paper) contracts, upon which the “spot price” is based. The banking establishment, waging wars forever against the markets, gave the silver market no love then, whilst obviously profiting wholesale off insider trading.

This period created a whole new breed of silver holder: The 49’er. I am here, dear 49’ers, to assure you that your sentiment was not in vain: the power of dollar-cost averaging, although it might be hard to get up the courage and buy more silver, cannot go understated. Here you sit today, down nearly $25 an ounce on your initial investment, if not more. What a great opportunity to “keep on stackin’!” Buy more silver! Why were you worried in the first place when you traded your Fed Notes for Silvers rounds and bars? You were thinking that this must be the final run for silver, with gold to follow shortly. It must be the end of the dollar! Now is a great time to buy silver not out of fear, but out of reason. Bring down your average cost per ounce.

As gold climbed all the way to a whopping $1,920 an ounce over the summer, apparently targeting $2,000 an ounce, silver continually tested the $36-$37 price range, only to be brought down as it flirted with $42-$44 price range down to $26 in late September. For the remainder the year, silver would do scant, barely flirting with the mid-$30 range.
Throughout the rest of 2011, Europe would be the center of worldwide attention, as the Eurozone pact seemed to be disintegrating before everybody’s eyes. In pavlovian obedience, money fled Europe for the U.S. Dollar, as well as gold and silver. For that reason, the metals markets, in dollar denominated terms, remained relatively quiet, until the last week of trading, when in seeming desperation paper pushers took advantage of quiet markets—during the week between Christmas and New Year’s—to bring down the gold and silver prices for a telling year end close.

Silver finished down on the year, approximately 8%. This year, those who champion silver as a sound investment or savings vehicle were wrong. Well, maybe the dollar was worth less by year’s end than it was at the beginning? Despite huge swings down towards 73 on the Dollar Index, the Dollar finished the year one point up from where it began the year at 79. And so, it finished right around 80.

But, with 2011 in the history books, silver trends did not change much, with worldwide faith in the dollar evaporating and individuals searching for inflation hedges. Riding the coattails of these inflation/collapse hedge seekers are those who have begun to view silver as a savings account or even as a social movement geared at bringing down criminal banks who operate above and beyond the traditional values of the population, as well as above law. Their actions only serve to increase demand for silver, and their actions will only continue.

Chaos will be the theme for 2012, and even the government knows that, as Obama signed into law NDAA on New Year’s Eve, a bill codifying into law the arrest and detention of Americans without right to council or a trial. Expect the real possibility for the Occupy protests against greed and corruption to begin morphing into food riots. Welcome to the Neo-Soviet Union: The United States of America. This is the reality on the way to a one world state in a totalitarian and command-and-control model, of which much has been written in philosophy, literature and social sciences.

For all that is good, if even solely out of moral efficacy, get out of U.S. Dollars.
Buy Silver! Crash JPMorgan!

Happy New Year 2012! Oh, how bittersweet…

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