Mark McHugh

What The Silver Vigilantes Understand That You Probably Don’t (Arithmetic, Human Nature and other Stuff)

In Open Thread, Silver, stocks finance, Treasuries on Wednesday, December 15, 2010 at 6:03 pm

Sorry about the insulting headline, but every last shred of evidence I can find suggests that the most people remain utterly clueless about silver, despite the efforts of the silver vigilantes, led by Max Keiser and Mike Kreiger.  Their brilliantly simple plan (go get some physical silver) promises to topple the criminally insane fraud that has become US economy.  It doesn’t require politicians or regulators to lift a finger either, you simply take advantage of what is undoubtedly an artificially low price.  I can completely understand anyone who is skeptical of that last statement; I’m sure you’ve been burned before, but that doesn’t mean you should stop seeking truth.  

Part 1. A little math.

I’m not sure when performing basic arithmetic made you a conspiracy theorist, but here we are.  

The 2009 World’s population was about 6.8 Billion.  According to the Silver Institute, total silver supply in 2009 was 889 million ounces.  That means there was .13 ounces of silver produced for every human being on the planet.  That looks like this:

Yep, your fair share of Worldwide silver production is a little less than the silver content of two pre-1965 dimes.  That’s all.  A bargain at about four bucks when you consider the amazing properties of this element.  FYI: World oil production per capita is 190 gallons. 


 …represents more than ten years of  worldwide silver mining production divided by 2009 population.  Less than $35, and hell of lot easier to transport than 7,600 quarts of Quaker State.  Please note that so-called “World production” includes government sales and scrap.  Government sales and “scrap” have accounted for more than 25% of  “World Silver Production” from 2000 to 2009.  I’m not sure I believe that one out of every four ounces of silver gets recycled, but understand that without that bonus production, demand exceeds supply by 37%. 

Part 2. Who needs silver?

Just about everybody, it turns out.  Sadly, another way to get yourself labeled a conspiracy theorist is by reading government documents like the Constitution, or the Department of the Interior’s 2009 U.S. Geological Survey which states:

The physical properties of silver include ductility, electrical conductivity, malleability, and reflectivity. The demand for silver in industrial applications continues to increase and includes use of silver in bandages for wound care, batteries, brazing and soldering, in catalytic converters in automobiles, in cell phone covers to reduce the spread of bacteria, in clothing to minimize odor, electronics and circuit boards, electroplating, hardening bearings, inks, mirrors, solar cells, water purification, and wood treatment to resist mold. Silver was used for miniature antennas in Radio Frequency Identification Devices (RFIDs) that were used in casino chips, freeway toll transponders, gasoline speed purchase devices, passports, and on packages to keep track of inventory shipments. Mercury and silver, the main components of dental amalgam, are biocides and their use in amalgam inhibits recurrent decay.

 Yet you can actually find dunces out there claiming that digital cameras have made silver obsolete.  You should live so long…

Fun Fact:  Silver (not gold, copper or anything else) is the element with the highest electrical conductivity.

Part 3. People lie…..

“…I want to make it equally clear that this nation will maintain the dollar as good as gold, freely interchangeable with gold at $35 an ounce, the foundation-stone of the free world’s trade and payments system.”

John F. Kennedy, July 18, 1963 

“That we stand ready to use our gold to meet our international obligations–down to the last bar of gold, if that be necessary–should be crystal clear to all.”

William McChesney Martin, Jr. (Federal Reserve Chairman) December 9, 1963


Lesson:  When someone says you can exchange paper for precious metals – make the swap before they change the rules.

Since the invention of paper, people have been writing bogus notes, and if there are two time-tested methods to become wealthy beyond your wildest dreams, they are:  1)Selling stuff that doesn’t exist and 2) Selling stuff you don’t actually own.  Unless you believe there has been a sudden outbreak of integrity in the banking industry, there’s no reason to believe these dynamics are not still in play, is there?  As recently as 2007, Morgan Stanley settled a class-action lawsuit with 22,000 clients who bought and paid storage on “phantom” silver (check out the Ted Butler article Money for Nothing).

At today’s prices, a million dollars in gold weighs less than fifty pounds, but a million dollars in silver weighs more than 2,300 pounds!  So ask yourself, how many rich people are storing their own silver?  How many hedge funds hold physical silver in their own storage facility?  Or have they entrusted the storage to the big banks?

JP Morgan is the custodian of the ishares Silver Trust (SLV), which now holds over 350 million ounces of silver, provides  sovereign and corporate investors with precious metals solutions (JP’s website), and is the largest short seller of silver in the history of the world.  Berkshire Asset Management’s  Eric Fry writes:

Based on some of the latest conjecture, Morgan’s short position totals a whopping 3.3 billion ounces. If, therefore, the buzz about J.P. Morgan and silver is even half true, the prestigious investment bank could be cruisin’ for bruisin’.

For perspective, 3.3 billion ounces is roughly equal to:

1) One third of all the world’s known silver deposits;

2) Two times the world’s approximate stockpiles of silver bullion;

3) Four times the annual mined supply of silver;

4) 30 times the inventory of silver at the COMEX.

If you can, forget about the conflict of interest, and ponder the enormity of the explosion.


Part 4. A little more math. 

 Estimates of total silver production since the dawn of man range from 46 to 53 billion ounces (roughly 11x gold production), but unlike gold, we’ve used pretty much all of it (although squandered might be a better word).  It’s in our cemeteries (fillings) and scattered throughout our landfills.  There hasn’t been a significant surplus since 1990.  Ted Butler and others estimate that there is far less silver bullion in the world than gold bullion and they back up their case with numbers  that the paperbugs have never even bothered to refute.  So why does gold trade at more than 45 times the price of silver?  Because JP Morgan, the US government, and every other psuedo-capitalist parasite wants it that way.  But that’s a truth for another day.

Part 5. Other things you should know.

 The Treasury has sold 34 million one ounce American Eagles so far in 2010.  Those sales total less than one Billion dollars. Apple (AAPL) trades about that much every hour the market is open.  Meanwhile the Treasury has issued more than 1.5 Trillion in new debt (1,500 times more) in 2010.  Just for fun, let’s multiply 1500 by 34 million.  A transaction of that size would have equaled every last bit of silver ever discovered at $30 an ounce.    Yet you can actually find people who believe silver is the bubble.

Treasury doesn’t make it easy to buy silver.  They’ll sell you bills, bonds and notes directly online, but not precious metals at anything close to market price.   The mint only does business with  11 Authorized Purchasers (a list can be found here),  Why the lack of savvy?

China can blow up the COMEXs silver market in the blink of an eye, at any moment.  They can do it with their pocket change, as a goof.  And if we piss them off enough, they will.

Part 6. So what’s silver worth.

The short answer is: more.  If silver were priced based on its occurrence relative to gold, it would be over $125/oz.  If it were priced on its availability – somewhere around $2,000.  But if you are content to let the likes of Blythe Masters dictate the value based on truckloads of worthless paper promises, you can expect ultra-low prices until the whole thing blows up.  Of course at that point, we’ll be so busy killing each other for food no one will have time to say, “I told you so.”

The silver vigilantes just want you to re-learn what the phrases like, “cold, hard cash,”  and “payment in full” are supposed to mean.  There not asking you to sink everything you have into physical silver,  just a little.  Silver can’t be printed into oblivion, or stolen by a cyber attack.  Why wouldn’t you want to own some of your very own? 

A paper dollar from 1960 is worth exactly the same as a paper dollar in 2010, but  four quarters from 1960 are worth more than $21.  Given the fiscal insanity of the US government, I can’t imagine the US dollar surviving another 50 years, but I’m quite sure that silver will still be useful.  Please consider getting some.






Update: All indications say this piece is the most widely read thing I’ve ever written.  I would like to thank everyone who helped make that possible especially Max Keiser, Steve Quayle and my friends at Zerohedge.  For the record: ANYONE (except – long story) is welcome to my original content here (which is like 99.9% of what’s here).  It would be nice if you mentioned me, but I won’t hunt you down if you don’t.

Some Personal Favorites:

M. C. Escher – Economist   (This graphic in particular)

Giant Leaps  – My best (and most ignored) work.

Tin Foil Hat America (the Eskimo Test) – provides insight into my madness

I can’t believe it’s no Capitalism! – graphic

Candy from Strangers – Who’s buying our debt? (I still don’t know)

“Shut-up And Eat Your Paint Chips, Kid” – Miseducating America (the ZH discussion  was great, and I love the Daily Bail’s graphic (not mine))

Understanding the National Debt (Sesame Street Edition) 

Hopefully there’s other wortwhile stuff here, but I think that’s all the shameless self-promotion any of us can stand.

Thanks for stopping by!

  1. […] Sorry about the insulting headline, but every last shred of evidence I can find suggests that the most people remain utterly clueless about silver, despite the efforts of the silver vigilantes, led by Max Keiser and Mike Kreiger.  Their brilliantly simple plan (go get some physical silver) promises to topple the criminally insane fraud that has become US economy.  It doesn't require politicians or regulators to lift a finger either, you simply ta … Read More […]

  2. […] What The Silver Vigilantes Understand That You Probably Don’t (Arithmetic, Human Nature and o… Sorry about the insulting headline, but every last shred of evidence I can find suggests that the most people remain […] […]

  3. […] What The Silver Vigilantes Understand That You Probably Don’t (Arithmetic, Human Nature and other … (Hat Tip: Brian B.) […]

  4. Excellent Mark, you have certainly dove into the meat of the issue. I am glad to see you take up the sword on this one. Also glad to see you getting your word out to so many places.

    Another interesting item on price verses availability/ rarity. Artificially controlled diamond prices verses any of the lesser valued but rarer gemstones.

    Might want to let your curiousity lead you down that tunnel as well…

    Manipulation has been the name of the game for generations.

  5. Thanks Gomp,

    I could delete all those pingbacks, but 1) I’m proud of them and 2)I want to remember the people who were kind enough to link to me.

    I don’t know that I’ll ever find time to learn about gems, but I know they play games there too. I saw “Blood Diamond.” Intense movie.

  6. Hey Mark, I was just looking for the secret of Oz video by Bill Still earlier, and it seems to be gone, do you know anything about that?

  7. No. The version I posted, which I think I got from you says it was “removed by the user.”


    I did find a copy on youtube however.

    That’s one more broken video link for me to fix.

  8. Thanks Mark. “Removed by the user” is what I kept finding as well at numerous places.

  9. I agree, and I have silver.

    HOWEVER, in reading William Engdahl’s “Gods of Money” (excellent book!), he mentions how in the banker engineered Panic of 1893, there were US proponents of silver (Sherman Silver Act and subsequent repeal) but through deceit, the bankers manipulated gold way up and shut down silver.

    Isn’t there the danger of 1893 happening all over again?

  10. Perhaps, but I don’t think so.

    What the people haven’t fully realized yet is that the bankers only have the power of illusion. They’re on life support but still trying to pretend they’re large and in charge. The government’s only idea is borrow and spend, borrow and spend…which they can do only in a collapsing fiat money enviorment. The two are locked in a death spiral, and any resemblance to real capitalism is purely coincidental at this point.

    There are limits to how far you can bend reality however and I think silver has already been bent to the max. I think the people who are buying silver now have no intention of swapping back into paper anytime soon.

  11. …just reading through here again and your note on conductivity intrigued me. Silver is also the best metal thermal conductor, but diamond is apparently the most thermally conductive material. We can create diamonds for approximately $5/carat … create silver?

  12. Ummmmm…sure, just tell me how.

    See Alchemy:

    At some point, I’m confident human beings will figure out either how to synthesize silver or make better conductors using other stuff, but for now, there is no acceptable substitute. The artifically low price of silver also stifles the process of innovation. There’s little reason to look for alternatives when the real thing is so cheap.

    And FYI – synthetic diamond (assuming you mean Cubic zirconia) looks like the real thing, but does not share its thermal characteristics – CZ is an insulator, not a conductor.

  13. I’ve also read some reports on fake silver…they say it looks convincing, but doesn’t make the same clinky-clinky sound real silver does.

    I love that sound….

  14. Yeah, I know… and how long have they been trying to turn lead into gold?

    I wonder how much fake gold is out there.

    On the CZ, I’m talking lab-created diamonds, not a Cubic, apparently there are created diamonds that have a higher thermal conductivity than the real.

    The clink is nice, especially with the really old coins.

  15. “Treasury doesn’t make it easy to buy silver. They’ll sell you bills, bonds and notes directly online, but not precious metals at anything close to market price. The mint only does business with 11 Authorized Purchasers (a list can be found here), Why the lack of savvy?”

    This is not a very accurate statement. The mint does direct sales and you do not need to go through an authorized purchaser. Right now production is halted – as the mint is required to meet public demand by law.

    Last year I eventually got my subscription filled for my proof SAE – samething will probably happen this year.

    Nice article just that one paragraph irked me.

  16. I can get four non-silver quarters for a paper dollar ANYWHERE. How many places can you get silver eagles. Most people have no idea how to get them at all. The fact that you bought directly from treasury means you paid at least 25% over spot. That’s not investing, that’s novelty collecting. Here’s the US law section you think you understand:

    (f) Silver Coins.— (1) Sale price.— The Secretary shall sell the coins minted under subsection (e) to the public at a price equal to the market value of the bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional and overhead expenses).
    (2) Bulk sales.— The Secretary shall make bulk sales of the coins minted under subsection (e) at a reasonable discount—-000-.html

    The “reasonable discount” the Treasury offers is 2 dollars over spot! People who buy the “special collector” coins from the mint really get gouged.

    Treasury should be promoting the coins at banks and the post office, instead they deal with 11 vendors!!! Imagine only 11 gas stations in the country. Right now, the Treasury has suspended ALL SALES DIRECTLY TO THE PUBLIC. How’s about they stop selling their garbage debt paper to the public? Most of the 11 authorized purchasers DO NOT resell to the public.

    Can I redeem US savings bonds for silver?
    Can I get them at the post office?
    Can I get them at my bank?
    Can I get them at Wal-mart?

    Sorry I irked you with the truth.

  17. I’ve noticed some of the “clad in a total 14 mg .999 pure silver” type of crap
    is “on sale” lately…

  18. I’ve seen so much of that stuff it’s scary – the buyer really has to beware. They make fakes of old gold and silver coins too. They’re supposed to be stamped “copy,” but what if somebody forgets….

    I’m not big on Nostradamus. Let me huff ether and I’ll say trippy stuff too. But this one has always concerned me:

    Century 8, Quatrain 28:
    “The copies of gold & silver inflated,
    which after the theft were thrown into the lake
    at the discovery that all is exhausted & dissipated by debt.
    All scrips and bonds will be wiped out. “

  19. Century 10 – Quatrain 98: makes me wonder…

    Salt was once worth more than gold… if necessities ever rule again as they once did.

  20. Great. Make me look stuff up….

    “For the merry maid the bright splendor
    Will shine no longer, for long will she be without salt:
    With merchants, bullies, wolves odious,
    All confusion universal monster.”

    Then I realized that I didn’t know what the word “odious” meant either. So I looked that up….here’s what caught my eye:
    “In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, such as wars of aggression, should not be enforceable.”

    The only question I’ve got now, is how much of the $14 Trillion falls under that definition….

  21. Genius is 99 percent perspiration and 1 percent inspiration.
    — Thomas Edison

  22. I am a silver coin collector and I would love this post to be shown to all my colleagues who had just laughed at me. Perhaps they will be praising me when they will read this. Thanks.

  23. I am sure they will consider you wise very soon….

  24. I was watching The Monster Squad the other night and realized you forgot Werewolves…
    I’d play it safe and have two or three ounces on hand for casting some .38 caliber bullets.

  25. Good point!

    There is no evidence that fiat currency has ever been useful in destroying supernatural beings….

  26. Buy it and keep on buying it. Aside from buying in bulk, you can also buy using a dollar cost averaging method with as little as 25/week or 50/month at .

    Enjoy and good luck to all.

  27. […] Source-… […]

  28. […] Previously: If you don’t know why you should own silver, please read:… […]

  29. >>A paper dollar from 1960 is worth exactly the same as a paper dollar in 2010, but four quarters from 1960 are worth more than $21.

    By my calculations, a 1960 dollar held for these 53 years has lost nearly 55% of its purchasing power due to inflation! That dollar is only “worth” forty five cents!

  30. True enough, but what I was trying to illustrate is a paper 1964 dollar, stuck in a safe, will only buy whatever a paper 2012 dollar buys, but holding cash in the form of silver coin greatly increase purchasing power.

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