Jeff Nielson for Sprott Money
A recent interview with a precious metals commentator in the Alternative Media raised several interesting points. While a number of the points raised are/were worthy of discussion; the topic which will be the focus of this commentary are the remarks (and conclusions) which were presented there concerning China’s “role” (if any) in the utterly fraudulent, global paper-silver market.
Knowledgeable readers are already well aware that the global “silver market” is at least 99% paper (i.e. paper-called-silver). The analyst in the interview, Eric Dubin, observed that competing (and contradictory) rumors/theories had emerged speculating that China was either “the Big Short” or “the Big Long” in this pseudo-silver market. Dubin himself rejected both theories, and those conclusions will now be reviewed here.
The theory that China is the Big Short in the paper-silver market was originally championed by Antal Fekete. His dubious reasoning was that China (whose economy is already the real “growth engine” of the world) was in partnership with the Western banking crime syndicate, allowing its own (supposed) secret stockpile of silver to be used by the banksters in their shorting “operations” (i.e. crimes), simply as a means of generating some modest income on that stockpile.
There are several, fatal objections to this theory. To begin with; shorting destroys stockpiles. It is a predatory, cannibalistic, and entirely unnecessary form of trading, and thus an activity which cannot be justified in any legitimate market. Put another way; any perceived “problem” which is supposedly addressed by short trading pales in significance versus the larger, numerous problems (i.e. potential for fraud) which are created by allowing short trading.
We already have overwhelming evidence of this truth, in the form of the silver market itself. Fifty years of (mostly illegal) shorting/price-suppression has decimated the global stockpile of silver by over 80%, according to the estimates of the esteemed Ted Butler.
While we see the inevitable result of serial shorting; many readers (and some commentators) do not understand the dynamics itself. Serial shorting always depresses the price in any market, and thus destroys supply/demand equilibrium. Specifically, in commodity markets; it simultaneously over-stimulates demand (through under-pricing) and depresses supply.
This creates a permanent, structural supply-deficit, which can only be met though depletion of stockpiles. Worse still, in the 21st century Age of Recycling; the depressed price which results from shorting severely discourages recycling. It is in this manner that the majority of the world’s stockpile of silver – a metal – has literally been “consumed”.
Because most of silver’s (numerous) industrial applications only require this precious metal in small, or even trace amounts; at current (artificial) prices, it is not economically feasible to recycle the silver from most of these industrial applications. Thus most of the world’s silver is now dispersed throughout the world’s landfills – deposited in tiny amounts, but in countless billions of now-discarded consumer goods.
It makes no sense at all for China to have gone to the trouble of acquiring (and concealing) a secret stockpile of silver, only to become a literal “partner in crime” in an endeavour which must (eventually) consume that stockpile. Even if China’s stockpile was the last to go; its own, rapidly expanding domestic market requires all of the consumer goods which, in turn, require silver. It’s like someone operating an elephant wildlife sanctuary deciding to open an ivory store.
Beyond this; China has centuries of experience as a victim of various forms of economic terrorism perpetrated by Western governments; more specifically, the Western bankers pulling the strings of these puppet regimes. From the Opium Wars to the post-World War I destruction of the global silver market (covered so thoroughly in Charles Savoie’s The Silver Stealers); China has frequently been on the “receiving end” of this economic rape.
While it is true that China’s current government has engaged in its own (literal) “Deal with the Devil”, allowing Western oligarchs access to its economy (and huge pool of cheap labour); this was the only practical means of fast-tracking its own economic development. The stunning growth figures reported by China are a testament to the economic justification and necessity of that original Deal with the Devil.
Conversely, not only would being the Big Short in the silver market ultimately result in consumption of its own (theorized) stockpile of silver, it would mean an unnecessary partnership with the same Economic Rapists who have victimized it in the past. We can thus rule-out this possibility beyond any doubt.
The question as to whether China is the Big Long in the silver market, however, is a question which is not dealt with as easily. Eric Dubin dismissed this possibility rather abruptly, concluding that against the overwhelming market-manipulation machinery of Western bankers (the One Bank) that China could not hope to stand against such fraud, crime, and corruption.
This argument has obvious validity, but only when considered as a single strategy, in isolation of other current and potential strategies of China’s government. For example; China now sits atop the world’s largest war-chest of U.S. dollar instruments: several $trillions of its (worthless) bonds and (equally worthless) greenbacks.
This has given China its (economic) “nuclear option”, should the current generation of Western economic terrorists (most of whom infest Wall Street) once again seek to destabilize or cripple China’s economy – as these economic terrorists have done again and again to nearly every other economy on the planet.
Armed with this additional context; this casts a new light on the possibility that China is the Big Long in the paper-called-silver market operated by the West. It has long been speculated/suggested previously in these commentaries that (along with Russia) China is “the Big Buyer” in the paper-called-gold market.
We know that there is an entity (or entities) meeting this description, in both the paper-called-silver and paper-called-gold market, because we can (occasionally) see their “handiwork”. On hundreds of occasions over the past decade; we have seen the banksters launch one of their infamous (and endless) “ambushes” on bullion markets. The method for these illegal take-downs of bullion markets is painfully familiar to regular readers, and bullion investors in general.
With one tentacle (the Corporate media); the One Bank creates a fraudulent (and usually laughable) “reason” for precious metals prices to go lower – “cover” for the illegal market manipulation about to take place. With another tentacle (it’s beloved Big Banks); the One Bank plugs-in this “reason” into the master trading-algorithm it uses to control all the world’s markets, and bullion prices cascade lower.
On occasions where it’s feeling especially malicious (or desperate?); the One Bank will also utilize a third tentacle: the corrupt operator of these corrupt commodity markets – the CME. As the final back-stab; the One Bank will order the CME to blind-side traders in bullion markets with a sudden-and-dramatic escalation of margin requirements. Previous evidence of corruption here is equally overwhelming and conclusive.
Yet despite this (seeming) omnipotence in perpetrating market fraud, in this case price-manipulation; on numerous occasions we have seen these ambushes suddenly/instantly reverse. The ambush is, itself, ambushed. The ink won’t even be dry in the lies of the Corporate media, “explaining” to us why prices must go down that day, when we see gold and silver prices boomerang higher.
Inevitably, these “boomerang” events result in all of the day’s losses being erased, plus a token gain in price – a gesture obviously aimed at delivering a little come-uppance to the One Bank’s market-manipulating thugs. This is immediately accompanied by the painfully hilarious contortion of the Corporate media, where (in complete contradiction of its original “explanation”, minutes earlier) it now explains why gold/silver prices must go up that day.
Someone/something is producing these momentarily lapses of justice, in markets otherwise drowning in an ocean of corruption. When it comes to any “list of suspects”, China’s name must appear near/at the top.
While there is no means of proving that China is the Big Long of the paper-called-silver market, there is no more-likely candidate. Alone (admittedly) such a strategy would be like employing a fly-swatter against the West’s battery of corruption artillery. But as one of several (numerous?) counter-measures against these economic terrorists; it is a strategy which immediately gains in credence.
Ultimately, the Big Long in the paper-called-silver market (China?) is an entity only concerned with its own economic agenda, and should never be thought of as any “champion” of the small investor, even though it stands (more or less) against the corruption of the One Bank. At the same time; it brings to mind the ancient, Arabic proverb: the Enemy of my Enemy is my Friend.
Jeff Nielson for Sprott Money
via Zero Hedge http://ift.tt/1zB8ShF Sprott Money
In early 2009, a U.S.