If you’re a silver investor, you may have that strange feeling you’ve been here before. That’s because you have. Here’s a chart comparing the price action of SLV from 12/17/2007 – 8/11/2008 to the price action of SLV 2/01/2011 – 9/23/2011:
Can you tell which is which?
The correct answer is: It doesn’t matter. Same movie, different year. In the case of 2008, the illustrated smackdown in silver preceded the Lehman collapse by about 4 weeks. Silver would not bottom until October 24, after Congress sold the grandkids into slavery for the sake of Goldman Sachs and other abominations of capitalism. I don’t know exactly what is going to happen in the next month or so, but I am sure it’s going to be huge and I’m sure that once again when everyone else panics, the smartest response will be to buy silver.
Silver was $4.18 when those planes hit the twin towers, $11.20 when Congress and Wall Street hijacked America (TARP – 10/3/2008), and $17.69 when the flash crash happened (5/6/2010). It’s not a bubble; it’s a rapidly vanishing resource, and when the next shoe drops, you should buy it.
In July, I told readers that the “set-up” for a market crash simply wasn’t there – that has changed. In 2008, large traders piled into the US dollar just prior to the carnage (just like they are now). As the dollar soared in the ensuing weeks, everything else (most notably America’s future) went in the crapper. Silver was dirt cheap – you just had to be smart enough to recognize that.
There are however some notable differences between 2008 and 2011:
- We’re $5 Trillion deeper in debt.
- There’s 50 million fewer ounces of registered silver at the COMEX
On October 24, 2008 the LBMA silver fix was $8.88 and there was about 83.4 million ounces available for delivery at the COMEX. On April 28, 2011 the silver fix peaked at $48.70 and registered silver stood at 33.3 million . So just to review, a 450% increase in the price of silver produced a 63% decrease in the amount of silver offered for settlement:
Abandon all hope of price discovery ye who enter here. Clearly the COMEX is hurtling toward the date with destiny you’ve been told about over and over (it’s only a matter of when). When silver dipped to $8.80, the market value of the registered inventory at the COMEX was a measly $740M. After the recent price gyrations, registered silver is now 31.04 million ounces, so that value now stands at $950M, or less than half the value of today’s SLV transactions ($2.1B). How crazy is that? I think Ben Franklin would say something like:
Those who would trade paper silver to get more fiat, deserve neither fiat nor silver.