On the Silver Highway
by Dr. Jeffrey Lewis, Silver-Coin-Investor I’ll fly a starship across the Universe divide And when I reach the other side I’ll find a place to rest my spirit if I can Perhaps I may become a highwayman again Or I may simply be a single drop of rain But I will remain And I’ll be back again, and again and again and again and again. – The Highwayman Kondratiev waves, supercycles, great surges, long waves, K-waves, the long economic cycle (Elliot waves), or any other supposedly cycle-like phenomena in the modern world economy. You can forget all about this. Just noise. The real deal is right in front of you. Public data for all to see. The irony of blatant silver price manipulation is that it actually makes it easier to see and predict price patterns. The skid marks of uneconomic, nonprofit intervention are visible to all who care to look with only the slightest magnification. Of course, rousing the wherewithal and desire to make the effort to look just beneath the surface is a tragedy all of its own. Technical analysis and other forms of pattern recognition are unnecessary, yet they are revered and worshipped. With silver especially, diving just below the surface we see the ebb and flow of the profit mechanism employed by the large traders. The repetition of history. It’s the grand rhyme of history; integration of trading, physical reality, politics, economics and behavior. Because the metals are feared by the elite, they will forever be managed to the extent that they can. So they do what ever it takes, using any and all means available to suppress the underlying price. Their methods are effective in the short term and profitable to the commercial investment houses that enable it – immune to common sense regulation and, therefore, the regulators themselves are part of the greater plot. The more intervention, the easier it is to read the patterns…like a child’s drawing, if it weren’t so sinister and amoral. The cycles of manipulation are there for the observation, marked by the big shorts capping the price on each and every rally. Price is held to percentage gains, never to follow through the afternoons. Technical funds liquidate as the price falls and then begin adding shorts, further accelerating the price to the downside. Once there are no more longs to harvest, the price rallies as the commercials cover and profit; the equivalent of taking candy from a baby. Shorts cover and the price rallies. New longs come right back in on the momentum only to be capped again. The whole cycle takes about 8-12 weeks to complete. The cycle has repeated itself over and over in the last many decades, with only brief glimpses of where the price will go once the manipulation ends. The technicals try and play all of this…the big commercials know exactly what they will do. Technology and the machines make all of this much easier to accomplish. The process has evolved. High frequency spoofing can push the market in whatever direction — with less and less concentration of positions. But by definition, the power needed to fuel these machines is concentrated. The actual short side concentration comes in on the price capping. Meanwhile, actual inventory movements within the COMEX system have become more frantic, a hidden strain. We are now sitting at the trough in the current cycle. The big banks have harvested practically all of the weak longs, longs that came in at the end of the last $2 move up in price that began in late 2014. Now the price is well below technically important moving averages and sentiment is horrible. Speculative, machine driven funds have or probably will soon begin shorting. This will provide the room for the big banks to cover and profit. The price will rise – until the big boys do it again. We keep coming back around and around. This will end and begin and again and again, keeping the whole thing together for a little while longer. But the rallies will come back and there will always be a steady trickle of physical metal off-take. The low growth low rates and fiscal debt monetization leading to confidence are all connected to repo, leverage, and derivatives; leading back to silver, COMEX, and default that occurs in parallel as we are gripped in issues elsewhere. Perhaps the mainstream will not have time to notice the metals rising – or the impact – the end game of the current world reserve experiment.