Two Important Questions

A reader has asked two very important questions that not only investors needs to ask, but each citizen in every country.

August 11/2011
In late April, silver flirted with $50 per ounce. "They" stepped in to manipulate the silver price (as if J.P. Morgan's and HSBC's manipulation wasn't enough), and raised margin requirements THREE TIMES in five days effectively stopping in its tracks the rise in the silver price that the MARKET wanted. As gold hit $1,800 yesterday, "they" did the same and raised the margin requirements on gold with the same effect as silver. In both cases, the raising of margin requirements caused a sell-off and of course, a decrease in prices.

How can those of us who know that gold and silver are the only true store of wealth and who have purchased physical gold and silver and continue to do so, protect ourselves from these blatant, in-your-face downward manipulations?

Also, what if the government makes it illegal to own gold as FDR did, ripping off the American people when it revalued gold higher?

The fiat ponzi scheme we call US dollars, Canadian dollars, Euros etc. is gradually unwinding. As it continues to fail, we can expect greater manipulation as those in powerful circles attempt to protect the status quo.

Ultimately they will fail.


Because a monetary system is actually a moral system.  Ours is a highly levered, fiat monetary system based on debt which involves both the government and banking system working together to extract as much as possible from the taxpayer. Perhaps it would be more accurately described as an immoral system.

The problem with the concept of fiat (that is "Promise") currency is that it is morally flawed.

And because the system is morally flawed, it does not matter how intelligent, or educated, or cunning the governors of the system are, the fiat currency system will fail.

This is why gold and silver have a 5,000 year history of use. With the use of a tangible form of money that actually meets the definition of money, no advantage or disadvantage is gained by buyer or seller.

Understanding this is key to protecting ourselves from the growing manipulation in the market. This is why I insist on taking physical possession of any precious metals I purchase and store them in a secure place. I have no patience or use for "gold certificates" or other paper promises. Yes, I play in the markets on occasion, but the profits from these ventures I role into physical gold and silver.

Manipulation of metals is only possible through leverage and paper promises. We can protect ourselves by not panicking when the suppressionists manage to push prices down a bit, or even significantly as they have with silver. The underlying fundamentals of fiat printing, combined with the low metal inventory levels will catch up to the manipulators at some point.
It is my view that the formation of a physical gold fund and silver fund by Eric Sprott back in 2010 will be a significant force in bringing about the changes that are necessary for a more honest trading and monetary system.  Buying shares in these funds could be one option for those who wish to buy physical gold but do not want to store it in a safety deposit box.

Disclosure:  The author does not presently have shares in PHY/U.TO or PHS/U.TO

In short, be patient with your precious metals, and take possession of them. A disciplined approach will payoff in the long run.

As to the second question of government confiscation we can look to history for answers. If citizens remain passive, and Canadians in particular are a remarkably passive bunch in my experience, then it is possible that a confiscation program would have a certain degree of success. 

It is my view, that with the Internet and social media, governments will have considerable difficulty enforcing a confiscation program. We need to remember that communication available in the 1930s during the FDR confiscation was very limited compared to today. If we look to recent events around the world, there is growing anger with those in authority, and such a move to further suppress savers, retirees, and the middle class would likely be met with surprising or even violent resistance.

With apologies to Clint Eastwood - you can have my gold when you pry it out of my cold, dead fingers.


  1. Evening PW, Funny Not one MSM Economic news channel has mentioned today's 30 year auction failure. Seems were all nice and complacent with the Stock Market circus show.

    Hmm, their plan is working just fine ( wink )

    CNBC pulled the article as noted here along with a copy of the original.

  2. Wow thanks for the tip Bill.

    I had not heard about this.

    The system seems to be breaking apart at a much faster rate than in 2008.

    We need to remain vigilant.

  3. How is it that you call raising margins on levered products as being manipulation? They are raising the margin requirement on risky products all the time and lowering them as well, this is normal course of business for decades going back to the previous bubbles.

    This is no more manipulation than your own made up conspiracy theory.

  4. I have to strongly disagree with your comment ShortBus.
    Raising margins itself is not manipulation. The timing of the margin raise is the problem. We saw this same behavior when silver went parabolic a few months ago and suddenly margins were raised three or four times in very short order.

    This is not the normal course of business, it is loading the dice to protect shorts. It is hardly a conspiracy theory, it is reality.

  5. How is it that you call raising margins on levered products as being manipulation? They are raising the margin requirement on risky products all the time and lowering them as well, this is normal course of business for decades going back to the previous bubbles.

    This is no more manipulation than your own made up conspiracy theory.


    As someone who watches the tape as vigilantly as the American Sheeple watches American Idol.

    I can tell you first hand sir, it is manipulated.

    The mining and PM sector has been manipulated since the 70's. 30 years at best. Try thinking for yourself instead of criticizing another persons opinion and acting as if yours has merit over our fine Host's.

    This market, even though we participate is about as real as our Glorious Presidents call for Hope and Change, a fallacy.

    Good day

  6. PW: Thanks for providing solid reasoning for holding onto physical silver/gold even in the face of a major dip (unless they raise interest rates, which is highly unlikely). Deep down, we all know that precious metals are the only form of real money.
    As a Canuck myself, I am gobsmacked at how truly asleep and passive my fellow countrymen are. I know however that I didn't wake up fully until I moved overseas for 14 years and got away from North American media and the Canadian year-round all-encompassing sports cult(ure).

    Shortbus: It's been public knowledge for a while now that J.P. Morgan and HSBC have had for decades REAL-LIFE (not imagined) massive short positions in silver. Ted Butler and the GATA guys have been shouting about it forever and they've finally been vindicated. This silver manipulation has been exposed as being 100% fact, resulting in huge class action law suits against these two "bigs". The N.Y. Times even wrote about it
    So there you go - you learned some truth today that you previously thought was complete fiction or conspiracy theory.

  7. Shortbus: Andrew McGuire, a metals trader in London, where that group of traders is small and where they all knew what was going on with the manipulation and indeed profited from it, became a whistle blower and contacted the CFTC about the massive manipulation of the silver market. Besides documentation, he actually gave them a blow-by-blow description of the two possible scenarios that would be used to manipulate silver after the non-farm payroll numbers came out. When the take-down in silver happened after those numbers did come out, he actually explained what was happening as it happened. When he was not allowed to testify in front of the CFTC about the manipulation, he then contacted Adrian Douglas of GATA. After it became public that Andrew was the whistle blower, he and his wife were nearly killed when a car came roaring towards them as they were leaving a supermarket. Witnesses tried to block the car as the driver attempted his getaway, but he drove straight at them too. The driver bashed into a couple of parked cars while making his getaway finally. Listen to Andrew McGuire's and Adrian Douglas' interview on King World News from some time last year:


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