Silver Manipulation

To build on recent comments by Bart Chilton of the CFTC...
I believe that there have been repeated attempts to influence prices in the silver markets,” said Bart Chilton, one of five commissioners on the Commodity Futures Trading Commission. “There have been fraudulent efforts to persuade and deviously control that price.”

Read more:

Consider the silver value of a Roosevelt Dime and how inflation has eroded the buying power of our fiat currency:

1946 - 1964 Silver Roosevelt Dime Value (United States)

$23.86 = silver price / ounce on Oct 26, 2010.
.90 = silver %
$3.8474 = copper price / pound on Oct 26, 2010.
.10 = copper %
2.5 = total weight in grams
.0321507466 = ounce/gram conversion factor

$1.7260 current value of Silver - Percentage of denomination = 1726.01%

In 1964 a loaf of bread cost 10 cents.
Now, in 2010 the same loaf of bread is $1.75.

A $1.75 happens to be the melt value of a 1964 silver dime (2.5 grams).

So, what happened to purchasing power with Central Banks in charge of the money supply?
Sadly, we all know the answer too well.

A few facts about silver courtesy of The Silver Institute:

Silver has been used as a medium of exchange since ancient times (see Genesis 23:16). It was not until the reign of Croesus (560-546 B.C.), king of Lydia (in Asia Minor), that silver was stamped as official coinage.

Throughout history, silver coins were, and still are in many places, essential for internal and international trade. The Spanish reales (also containing 0.8 oz.. silver), minted in Mexico and Peru, were used throughout the Americas for generations. And nearly 400 million of the 1780-dated Austrian Maria Theresa thalers (containing 0.8 oz. silver) have been struck over the past two hundred years to serve as trade coins in Europe and Asia.

In 1792, Alexander Hamilton, then the U.S. Secretary of the Treasury, proposed the adoption of a gold and silver based monetary system. Silver remained in circulating U.S. coins until the supply of silver could not meet the demand for coins and the face value of the coin fell below it's bullion, or meltdown value. The U.S. government eliminated silver from quarters and dimes in 1965 and half dollars were reduced to 40%. In the U.S. today, silver is used only in bullion, commemorative and proof coins. Mexico is the only country currently using silver in it's circulating coinage.

Throughout history, governments and private interests, sometimes working in cooperation, have attempted to various degrees of success to manipulate the value of the currency.

In Roman times, copper was added to the silver denarius to dilute its silver content. Over a period of about 250 years, the coinage was so debased that a "silver coin" was more than 95% copper. The additions to the coinage allowed the empire to pay large numbers of soldiers in its never ending quest for European and Middle Eastern dominance.
In time, even soldiers did not want the debased currency.  So to pay for Barbarian mercenaries, Rome had to resort to paying in gold.
Hence the reference to gold as a barbarous relic!

Consider the chart below:

In modern times, the value of the fiat US dollar has been eroded at a much faster rate as the chart from Grandfather Economic Report demonstrates:

The philosophy that supports this type of fraud is Nietzschean.

It is based on moral relativism.

In my view, we will soon find out through a new economic recession that this philosophy is utterly false.

Consider some recent quotes from Bill Gross of PIMCO:

Still, while next Wednesday’s announcement will carry our qualified endorsement, I must admit it may be similar to a turkey looking forward to a Thanksgiving Day celebration. Bondholders, while immediate beneficiaries, will likely eventually be delivered on a platter to more fortunate celebrants, be they financial asset classes more adaptable to inflation such as stocks or commodities, or perhaps the average American on Main Street who might benefit from a hoped-for rise in job growth or simply a boost in nominal wages, however deceptive the illusion. Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic.

... the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.
Despite his accurate assessment of the Ponzi scheme, Bill Gross seems to support monied interests and the Fed that are determined to keep the status quo.

This has always been the moral hazard of fiat (promise) currencies.
They exist based on faith and credit of the issuer.
When faith is lost due to the lack of credibility of the issuer, the Federal Reserve, in our example, a total monetary and political breakdown is a small step away.
Fiat currencies fail because they are illusions built on false philosophies and an impaired world view.
Gold, and its cousin silver, are real, honest money.

The danger in all of this, as I see it, is a crisis that leads to revolution rather than the difficult and painful reform needed to restore the republic.


  1. Great Post Mr. Bailey. Revolution is needed for Reform and a must. Unfortunately though Main Street is not in enough pain "YET" but the whispers are getting louder and louder.

    Great Blog indeed.


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