Silver Summit: Analysts Cry Manipulation
Wed, Oct 1, 2008
By Melissa Pistilli - Exclusive to Silver Investing News
Recently, I attended the Sixth Annual Silver Summit in Coeur d’Alene, Idaho where investors, mining executives, industry analysts, and silver aficionados met to discuss and learn more about what’s happening in the silver market. Needless to say, it was an interesting time to be at a precious metals conference given the critical events occurring in the US financial markets.
The days leading up to the conference were frustratingly disappointing for those in the precious metals sector, investors and mining exec’s included. September 16, the day before I flew from Vancouver to Coeur d’ Alene, Gold had dropped as low as $779/ oz and silver was trying desperately to stay above $10.50. I had a feeling the mood at the Silver Summit would match the level of precious metals prices: in the dumps.
The next day, all that turned around as silver jumped $2.50 and gold gained $85 on news that shares in Goldman Sachs and Morgan Stanley had plunged on waning investor confidence and the SEC announced it was taking action against naked short selling abuses. The surprising one-day gains in precious metals were enough to infuse the Silver Summit crowd with a much needed dose of optimism.
Amongst the Summit’s most influential speakers were Sprott Assets Chief Investment Strategist John Embry, noted metals analyst David Morgan, respected trader Roger Weigand, CPM Group Managing Director Jeffrey Christian, and chairman of the Gold Ant-Trust Action Committee (GATA) Bill Murphy. Also, Al Korelin hosted a segment of his nationally syndicated radio program The Korelin Economic Report, with a panel that featured Morgan, Embry, Murphy, and editor of the Silver Valley Mining Journal David Bond.
The market uncertainty and apprehension of what is to come brought on by the Lehman Brothers bankruptcy, Bank of America’s takeover of Merrill Lynch, and Paulson’s bailout announcement influenced much of the analyst presentations at the two-day Silver Summit. “Today is one of the scariest days in market history,” said Bill Murphy, “I think that what has happened today is the most staggering thing that’s ever happened for gold and silver. I think gold and silver very shortly will get overwhelmed by demand from the whole world. The American capitalist system is now changed. It’s gone.”
David Morgan expressed the same sentiments: “We are in the one place in financial history that will probably go down as the most memorable ever because it’s a worldwide phenomenon and as everybody bails out of the dollar the whole ship goes down.”
To John Embry, the government bailout on Wall Street would serve to further undermine the value of the US dollar and result in the debasement of other global currencies, which will ultimately lead to global hyperinflation; circumstances that will no doubt lead to more and more investors seeking safe haven in gold and silver.
Silver Optimism
It’s safe to say the Silver Bull was alive and well in Couer d’Alene Idaho and its likely the Summit’s attendees took that optimism home with them. The consensus amongst most at the conference-analysts, mining execs and investors alike-is silver will probably reach new price heights by the end of this year and explode throughout the next three to five years.
“When I say last chance that is exactly what I mean,” urged Embry. “When gold and silver clear a $1000/oz and $20/oz convincingly-and that day is coming very shortly-it is my opinion that they will never ever trade at those levels again.” Embry expects the precious metals to reach new price plateaus as they did during the seventies. Those who miss the boat on the current bargain basement prices “will absolutely rue the day.”
Why are analysts like Embry, Murphy, and Morgan so certain? Most believe, and rightly so, that the fall of the major U.S. financial institutions, the deepening housing market crisis, rising unemployment, the threat of hyper-inflation and a looming depression all point towards an extremely unhealthy U.S. economy on the verge of collapse. Many view the U.S. dollar as headed towards extreme devaluation, which will ultimately spell disaster for the rest of the globe as even today financial markets around the world are experiencing the same economic pressures.
Once the reality of the global economic crisis sinks in, precious metals are bound to regain their historical status as safe haven protection from economic catastrophe. However, how much worse does it need to get before gold and silver really take off? It would seem to most that time has already come. The financial climate was not even close to being this bleak back in March when gold broke $1000/z and silver reached $21/oz.
Manipulation in the Markets
So what’s holding the precious metals back from soaring over their earlier records this year? The widely held belief amongst the majority of silver buffs, the Summit crowd included, is that the U.S. Treasury, the Federal Reserve and various influential financial institutions are manipulating silver and gold prices in an attempt to hide the truth and stall the inevitable.
Seasoned precious metals investors are well aware of Bill Murphy and his organization’s (GATA) fight against what the group calls “The Gold Cartel” and their manipulation of the gold price. During the taping of Al Korelin’s radio program at the Summit, Korelin asked Murphy to explain how gold manipulation relates to the price of silver.
As both precious metals have historically held value as currency and safe haven assets, gold and silver prices are inextricably linked, and the Cartel knows this to be true. Gold is a barometer of the US financial market’s health, said Murphy. “Whenever it goes way up it’s bad for Wall Street as they perceive it. To keep it in line and not make it look too obvious, they make sure to go after the silver market in conjunction with gold as evidenced by Ted Butler’s report.”
Just who is The Gold Cartel? According to GATA, the group consists of the US Treasury, The Federal Reserve, and institutional heavies like Goldman Sachs and JP Morgan Chase. Why control the price of gold? To contain fear, control interest rates, and maintain a semblance of strength in the US dollar and the economy.
John Embry’s argument for the existence of manipulation in the precious metals market was the most convincing. Embry feels, as do many, that the dramatic drops in the silver price despite the seriously dire circumstances of the financial markets are proof positive of aggressive manipulation by western central banks to defend the fiat currency system in order to discourage investment in alternatives like gold and silver. But, said Embry, they are only delaying the inevitable. Every fiat paper money system in history has failed without exception, he continued. As Voltaire pointed in the 18th century, “paper money eventually returns to its intrinsic value-zero.”
Concerning silver’s unforeseen dive from $19/oz to below $12 in a matter of weeks and the events outlined in Ted Butler’s expose “The Smoking Gun“, Embry railed against attempts to rationalize the huge decline that has caused many to point at the rise of the US dollar during that period and the unwinding of short dollar long commodities trades by leveraged hedge funds and others. “Now to be fair,” he said, “I agree to extent that this phenomenon should have led to a correction in the precious metals. But to have triggered an outright rut strains credulity.”
Embry urged the audience to question whether or not they believe that the underlying fundamentals for the US dollar have improved enough to constitute a stronger dollar: “Does anyone truly believe that a country whose housing, automotive and airline industries are in a state of collapse, whose banking systems are in a shambles, whose retailing industry is sharply retrenching, and whose consumers are being eaten alive by rampant food and energy inflation while unemployment mounts, is actually growing?”
All of this price manipulation cannot be good for the gold and silver mining industry. But, what can they do about it? Embry received a fervent and boisterous round of applause when called upon industry executives to “get off their collective assess” and come together to combat the collusion occurring amongst the large financial players who are in effect destroying the industry.
Tags: al korelin, bailout, david bond, david morgan, dollar, gold, goldman sachs, investing, investor, investor confidence, john embry, lead, manipulation, merrill lynch, metal, mining, mining journal, morgan stanley, paulson, precious metals prices, prices, shares, silver, silver market, silver summit
October 3rd, 2008 at 2:14 pm
yes, but how do we make this point to the mainstream financial media and appear creditable?
All they watch is the comex and do not publish the spread and premium for physical deliveries.
Remember, gold and silver and uranium too for that matter are very small markets as compared to financials. Financials in almost all commodities routinely dwarf physical markets.
We need a system that reports spot prices for physical delivery of 5 oz gold bars in major centres converted to various currencies.
Only this mechanim will expose the Comex as unreliable and not indicative
This has been done in many markets
Also, we have to get Kitco to quit publishing prices tied only to financial markets.
October 3rd, 2008 at 3:43 pm
Congratulations to John Embry, Billy Murphy and the other honest and intelligent observers for pointing out the blantant, fraudulent, illegal and immoral manipulation of the precious metals’ prices by the US government and its Fed, Wall Street and Treasury lackeys. One has to wonder if fellow pro-status-quo lackey Jon “See No Evil” Nadler was at the conference as well, and whether he stood to defend his pro-establishment bedfellows and their overt actions to support their rotting and tottering financial edifice.
October 3rd, 2008 at 5:09 pm
Set up a market place in the web where only silver and gold for physical delivery is auctioned. It will grow in time and destroy the reliability of the COMEX.
Axel Heinisch - P.R.China
October 3rd, 2008 at 6:34 pm
is it possible silver is dropped to under $11 so that the paper shorts can recover
October 3rd, 2008 at 10:30 pm
Who cares what the mainstream media think about gold/silver? Prices are dropping because the government and banks think that controlling market prices will help manage the dollar. They are woefully incorrect and the truth will out, explosively, in time. In addition, panic selling to raise cash/meet margin calls have slid prices way down. Isn’t that a gift to us? Would you complain if fine wines sudfenly dropped 50% in price? Actual street metal prices belie the paper prices in the markets right now, but as supply dries up, the pressure will become irresistable.
John’s words have helped me to steel myself and not lose faith, which has been sorely tried in recent months. I have “lost” a fortune (on paper) and my wife is all over me about it. I told her that some day she will thank me and she shakes her head sadly.
October 4th, 2008 at 1:16 am
It is difficult to understand how by whatever method demand for real gold and silver at low prices from the whole world including Europe, China, Russia, India, S America, the Middle East, etc, can be so easily overwhelmed and persistently controlled by one single country, the US.
October 4th, 2008 at 3:02 am
Charlie, all the nations that are creating fiat currency would have to be in collusion with the fed in suppressing the value of the precious metals, for the same reasons: What a scam. The ones in power cannot resist having the ability to create counterfeit wealth. The enrichment of the few at the expense of the many. This has been going on time and time again
October 4th, 2008 at 5:08 am
What needs to be done, is EXACTLY what Antal Fekete rcommends…
Get in the Futures Market with them, and trade…
Miners have the supply, but futures market controls the price….
Ply the price against the supply….Voila…”"PROFITS”"”
In other words, beat them at their own game…..
October 4th, 2008 at 7:29 am
There is no manipulation. What is being suggested is akin to a gnat biting a buffalo in the ass. This cartel (and it surely is one) isn’t strong enough anymore. The physical market has decoupled from the stock market but not because of conspiracy theories.
The dollar is in a rally because it is scarce. This isn’t what the cartel wants because the rally is due to scarcity—presently referred to as a lack of liquidity because of a frozen credit market. The cartel wants liquidity and hasn’t made any effort to print more money yet. Once they do, they’ll have to drop it from Bonanza Bernanke’s Beautiful Black Helicopters.
That’s when silver prices will go up. For the short term, however, the dollar will stay in a bit of a rally contrary to what the cartel is really looking for—liquidity.
So this notion of manipulation is really frivolous. There’s always manipulation. When I buy and ounce of silver, I do it on a very small scale. When I negotiate a price for something, I am manipulating the market. Manipulation is the essence of capitalism and it happens all the time. True, the cartel isn’t supposed to manipulate but ya’ll give these idiots far too much credit. For once, they are WAY in over their heads especially with the derivatives. The decline in the market yesterday AFTER the bailout welfare bill proves it.
October 4th, 2008 at 5:41 pm
If the manipulators drive the price of gold down to $250/oz to support the paper dollar, it’s absolutely fine with me. The lower the price, the better. I’m in this for the long term, and in the long term, given the current levels of debt and spending and the la
October 4th, 2008 at 5:43 pm
If the manipulators drive the price of gold down to $250/oz to support the paper dollar, it’s absolutely fine with me. The lower the price, the better. I’m in this for the long term, and in the long term, given the current levels of debt and spending and the lack of an industrial base in the US, the dollar (and most other fiat currencies including the Chinese renminbi, the Euro, the pound and so on) is toast.
October 7th, 2008 at 7:26 am
The only way is to arrest Helicopter Ben, Hanky Panky Paul or the old wark Greenspan for their crimes. Good luck with that America.
Otherwise start putting preasure on the Plunge Protection Team but to do that would require the SEC to do their jobs, again good luck with that.
Otherwise I am guessing they are waiting for the next (s)elected president to be sworn into office.
Or with any luck “The October surprise”
October 7th, 2008 at 11:40 am
Gata has been right all along. It is now just becoming more eveident to those who cannot “see”.
It is actually good that the metals were taken down so heavily to:
1. Make the crime more visible
2. Give so many ivestors the chance to get back into the market, albeight at a very high premium right now.
If investors understand WHY the premiums are so high, they will buy and not be put off waiting for them to shrink.
On the shares, especially smaller ones, t doesn’t matter if they come down another 50%, as long as you own them, it’s something, much better than paper money. And….once they take off it will be much too late to get in.
It is here. Load the boats!
Warren,
http://www.preciousmetalstockreview.com
October 8th, 2008 at 3:15 pm
The US violates its own constitution when it borrows a fiat currency from the Federal Reserve[a private bank].Thomas Jefferson prophesied that “If the American people ever allow private banks to control the issue of their currency,first by inflation then by deflation,the banks and corporations that will grow up around them,will deprive the people of all their property until their children wake up homeless on the continent their fathers conquered.”A pretty accurate picture of today from 200 years ago.
November 4th, 2008 at 7:35 am
The banking thieves (Rothchilds, Goldmans, Sachs, Lazards, Morgans, etc) in collusion with the Bush Clan (lucky sperm club, sperm without brains for 3 brothers)can suppress silver and any other precious commodity for periods longer than you can stay solvent. The Bush Police state (Bush I being head of CIA earlier) uses local police with bullets against ‘terrorists’ at home and standing armies with bullets against ‘terrorists’ abroad funded by the unwitting taxpayer. Definition of ‘terrorist’ anyone who disagrees with the village idiots from the lucky sperm club. So sit back and watch the wholesale rape of a country and world by somebody called ‘Bush,’ how ironic a Bush raping something.